Dixon Technologies trades largely flat; posts a 48% rise in Q1 net profit

Dixon Technologies traded largely flat on July 26 after giving up early gains. The stock had jumped nearly 2 percent on opening as the company reported a 48 percent year-on-year growth in net profit for the April-June quarter of FY24.

At 11:48 am, the stock was trading at Rs 4,094 on the NSE, largely flat against the previous close.

Brokerage firm Nuvama downgraded Dixon Technologies post the results with a target price of Rs 3,925 stating: “We downgrade Dixon to ‘hold’, noting that most segments, save for mobiles and EMS, are facing demand headwinds and decelerating growth – mobile revenue upgrades should be offset by downgrades in other segments’ revenues. FY23-25E revenue, while strong at 28 percent CAGR now seems at par with consensus, and now in fact lower margins may cause Street’s earnings downgrades.”

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“The stock is up over 50 percent in the past 3 months, now at 55x PE (FY25E), all seems baked in. Q1FY24 EBITDA was below estimates, and finally Dixon announced the addition of its second-largest client for mobiles, alongside Xiaomi and Tinno contracts won earlier. We revise our TP slightly to Rs 3,925 (from Rs 3,865) based on 52x PE, but now the upside seems limited.”

Foreign broking firm Jefferies also downgraded Dixon Tech to ‘hold’ from ‘buy’ in a recent report. Jefferies’ target price on the stock is Rs 4,550, which indicates a 5 percent upside from the current market price.

Stock Performance

Dixon Technologies has posted a return of 52.11 percent over the last six months, outperforming the Nifty Midcap 100 index which has given a return of 20.18 percent over the same duration.

The company on July 25 reported a consolidated net profit of Rs 67.19 crore for the quarter ended June, up 48 percent from Rs 45.43 crore in the year-ago period. It reported a 15 percent year-on-year rise in consolidated revenue from operations at Rs 3271.50 crore against Rs 2,855.07 crore year ago. Earnings before interest, tax, depreciation and amortization  for the quarter was at Rs 134.72 crore growing by 34 percent. EBIDTA margin rose 4.1 percent.

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