Dixon Tech Q4 profit falls 36% despite revenue growth and expansion plans

Electronics manufacturing services provider Dixon Technologies reported a 36% on-year decline in net profits at Rs 298 crore for the quarter ended March 2026, even as quarterly revenue grew 3% on-year to Rs 10,595 crore.

Dixon’s management said the March quarter faced a sluggish environment where revenues remained flat due to geopolitical tensions, soft consumer demand and inventory rationalisation by customers. Rising component costs of memory chips and semiconductor-linked inputs also weighed on profit margins, which fell 170 basis points to 2.8% in Q4FY26.

However, since the company operates on a pass-through model, these increased component costs automatically inflate overall revenue which can optically lower profit margins, even though per-unit profitability remains protected, Atul Lall, vice chairman and managing director, Dixon Technologies told analysts on Tuesday.

Lall said the conclusion of the production-linked incentive scheme which ended in March 2026 also contributed to the company’s ongoing margin pressure. The top executive warned that while the company’s absolute profitability is expected to rise, the company will see near-term margin compression without the benefits of PLI and a delay before the margin-expanding benefits of its backward integration play fully kicks in.

For the ongoing fiscal, Lall said revenues from handset production for the domestic market will remain largely flat, from 32-33 million domestic production in FY26 but revenues from handset production will grow significantly due to a 12-15% increase in average selling prices. Lall said Dixon’s joint-venture with Vivo to manufacture its smartphones is in advanced stages of government approval and could add another estimated 20-22 million smartphone units annually.

Lall also said the government is working on another PLI scheme for mobile phones, likely targeted towards increasing exports. If that happens, Dixon expects an additional 4-5 million units of exports. The company currently exports smartphones for Motorola to the US and feature phones and smartphones for Transsion for African markets.

Dixon also expects a three-fold jump in revenues from IT hardware production, to reach over Rs 4,000 crores, while revenue from its telecom equipment manufacturing is expected to jump from Rs 5,000 crores in FY26 to Rs 7,500-8,000 crore in FY27. Overall, DIxon expects FY27 revenue to grow 15-17% to cross Rs 56,000 crores.

To further diversify its portfolio and capture higher profitability, Lall said Dixon will be entering the specialty industrial EMS sector, focusing on aerospace, defense, automotive, medical, and industrial verticals. The company has brought in a global consulting firm to target scalable business to the tune of Rs 3,000-4,000 crore that command significantly higher operating margins than consumer electronics segments.

With the mobile phone PLI scheme ending, Dixon is aggressively scaling up its backward integration projects, Lall said. The company’s partnership with Kunshan Q-Tech Microelectronics for production of camera modules is expanding from 70-80 million units presently to 180-190 million units annually over the next 15-18 months, with an estimated revenue target of Rs 2,500 crores.

For its display module assembly project with HKC, Dixon expects commercial production to start from the March quarter of FY27. This project is expected to generate Rs 5,000-6,000 crore in revenues with mid-to-high double-digit margins once it reaches 80-90% capacity utilisation.