Dixon Technologies share price: Brokerages cut target for BSE 100 stock, but maintain ‘BUY’ rating - upside up to 39%

• Better-than-expected performance
• In-line revenue, beat on EBITDA and PAT
• Smartphone volumes to remain stable
• Telecom and IT hardware scaling due to expanded capacities
• Consumer electronics remain soft, while home appliances gain traction
• Export momentum is building across segments
• Tweak estimates slightly for FY27/FY28 to bake in lower volumes and lower margins, but higher smartphone realisation
• Expect a CAGR of 33%/37%/36% in revenue/EBITDA/PAT over FY26-FY28
• Expect an EBITDA margin of 3.3% for FY27, while it is expected to increase to 4.1% in FY28 as backward integration initiatives start factoring in after PLI

Dixon Technologies share price: Emkay maintains buy rating - here’s why

• Dixon logged a weak Q2, with revenue up only 2% YoY amid sequential improvement in the mobile phone business (up 8.5% QoQ, led by better ASP) and 50% YoY decline in the telecom business.
• EBITDA margin was stable QoQ at 3.9%. Following demand moderation in the last 6M, demand-supply dynamics of the mobile phone industry are stabilising.
• Dixon guided to flattish smartphone volumes in FY27 (~33mnpa units vs earlier guidance of 60-65mn), though revenue is expected to grow 12-15% (led by higher ASP due to rising component prices), with total revenue growth of 15% YoY at Rs 560 bn.
• Pressure on mobile EBITDAM from PLI lapsing (~0.6%) would be partially offset by better operational efficiency, with benefits from backward integration FY28 onward
• Dixon expects a 40-50 bps margin expansion on the ramp-up of component manufacturing. IT Hardware revenue is expected to scale up 3x in FY27, on a strong orderbook across clients.
• Dixon is undertaking initiatives to diversify from its current business and add future growth levers, like a foray into the high-margin industrial EMS business (attractive M&A opportunities on the table; a couple of these could fructify in FY27).
• Also, per the management, Vivo JV approval is around the corner.
• The brokerage cut FY27E/28E EPS by 27-29%, factoring in lower smartphone volume (nil volume from Vivo), along with pressure on mobile business EBITDAM due to lapse of PLI and delay in backward integration.