“Edelweiss commented that Dixon Tech Q3FY23 earnings and management commentary fell short of expectations. Revenue was down 22% YoY, but Q3FY23 PAT was up 10% YoY due to margin expansion. Dixon also reduced its revenue guidance which may negatively impact the stock in the short-term.
However, the brokerage house believes margin expansion is structural and therefore profit downgrades should be lower, retaining a ‘BUY’ rating with a revised target price of ₹3,865 per share.”
“Dixon Tech is counting on new clients in the mobile division to double mobile revenues (to ₹80 bn) in FY24E. Despite cutting FY23E/24E estimates, growth is still projected to be healthy (with 30%+ RoE). Emkay has retained its ‘BUY’ rating with a revised target price of ₹3,865 per share, while expecting near-term weakness for the stock as earnings downgrades play through.”
“Emkay believes that slowdown in some key segments is hindering overall growth of brands, with additional impact from Dixon being a B2B supplier.
The brokerage house has cut its FY23e-FY25e EPS by 16-20% mainly due to lower sales, while maintaining a ‘HOLD’ rating with a December 2023 target price of ₹3,165 per share based on 35x PE. Sales ramp-up remains the key monitorable going forward, in their view, with risks including slowdown leading to lower requirement by brands.”
“Yes Securities has upgraded the stock to ‘Neutral’ (TP: ₹3,506) as the stock has already corrected significantly and strong growth momentum is expected to resume as the order book across categories remains healthy; new capacities have begun commercial production; revenues from new product categories like wearables and refrigerators will drive incremental growth; and new JV in wearables and telecom products will add further growth levers.”
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