Here's why Nuvama trimmed Dixon Technologies' target price post Q2 results

Nuvama analysts have marginally lowered Dixon Technologies' December 2026 target price to ₹16,600 from ₹16,800, valuing the stock at 65x estimated December 2027 EPS

Despite a healthy second-quarter performance, brokerage firm Nuvama Institutional Equities has trimmed its target price for electronic manufacturing services (EMS) player Dixon Technologies following the company’s Q2FY26 results. The brokerage has retained its Hold rating, citing Dixon’s strong balance sheet — reflected in negative working capital of six days and a modest net debt of ₹200 crore — which underpins its planned ₹1,100 crore capex for FY26 across IT hardware, components, and appliances.

 

Nuvama analysts revised the December 2026 target price marginally lower to ₹16,600 from ₹16,800, valuing the stock at 65x estimated December 2027 EPS. The cut follows a moderation in earnings estimates by 8–13 per cent amid near-term pressures in select business segments. However, the brokerage remains constructive on the medium-term outlook, projecting strong compound annual growth rates (CAGR) of 33 per cent in revenue, 37 per cent in earnings before interest, taxes, depreciation and amortisation (Ebitda), and 30 per cent in adjusted PAT over FY25–28.

Dixon Technologies Q2FY26 performance

The brokerage highlighted that the company’s revenue grew 29 per cent year-on-year (Y-o-Y) to ₹14,800 crore, driven by a strong performance in the Mobile & EMS segment, which rose 41 per cent Y-o-Y. In contrast, the Consumer Electronics and Home Appliances segment declined 25 per cent Y-o-Y due to demand deferment following the GST rate cut.

 

The company’s Ebitda increased 32 per cent to ₹560 crore — about 1 per cent above Nuvama’s estimate — with margins steady at 3.8 per cent (up 10 basis points Y-o-Y and flat sequentially). Reported PAT surged 195 per cent Y-o-Y to ₹670 crore, aided by the revaluation of its stake in Aditya Infotech and the transfer of its lighting business, the analysts said. Adjusted PAT grew 15 per cent Y-o-Y to ₹247 crore, about 3 per cent below the brokerage’s estimate. 

Guidance, growth outlook

 

The brokerage noted that Dixon revised down its mobile volume guidance to 40–42 million units for FY26 and 55–60 million for FY27, from prior forecasts of 43–44 million and 60–65 million units respectively. Nuvama analysts expect some margin pressure in the mobile segment in FY27 but highlight that the company’s medium-to-long-term growth plans remain on track, targeting ₹1 trillion in revenue and Ebitda margins of 4–4.5 per cent within the next 3–4 years.

 

Operationally, Nuvama said Dixon’s performance remains strong across verticals, boosted by new client additions, deeper component integration (including the QTech acquisition), and progress in IT hardware and telecom segments, supported by institutional orders and the Airtel joint venture ramp-up. The company is also advancing discussions with a new ODM partner for mobile production.

 

“Dixon indicated advanced engagement with a new ODM partner for mobile and guided for 40–42 million and 55–60 million mobile volumes in FY26 and FY27, respectively, lower than earlier guidance of 43–44 million and 60–65 million,” wrote the analysts in a research note. “Management expects a stronger second half with the start of large customer production under PLI 2.0, ramp-up of new joint ventures, and a festive-led uptick in consumer categories.”

Balance sheet strength, outlook

The analyts underscored Dixon’s healthy balance sheet, with negative working capital (–6 days) and manageable net debt of ₹200 crore, which supports ongoing capex commitments of ₹1,100 crore in FY26 across IT hardware, components, and appliances.  “Maintain ‘Hold ’ with Dec-26E target price of ₹16,600 (earlier ₹16,800), basis 65x Dec’27E EPS.”