 "Nomura cuts Dixon target, trims estimates on weak mobile demand; keeps Buy")
Japanese brokerage Nomura has cut its target price and earnings estimates for Dixon Technologies (India) amid near-term pressure on smartphone volumes from rising global memory prices, even as it maintained a ‘Buy’ rating on the stock given strong medium-term growth drivers.
The brokerage lowered its target price to ₹16,598 from earlier levels, implying a 36 per cent upside from current prices. It also reduced its target valuation multiple to around 45x FY28F earnings from about 55x earlier, factoring in weaker mobile demand and a potential moderation in earnings growth beyond FY28. Alongside, Nomura cut its earnings per share (EPS) estimates by 17 per cent for FY26F, 16 per cent for FY27F and 7 per cent for FY28F.
“We lower our target P/E to ~45x (~55x earlier), which is at the lower end of Dixon’s ~40-60x historical trading band, to factor in the risks from the weakness in mobile demand and potential earnings growth slowdown to 25 per cent post-FY28F,” said Siddhartha Bera, Kapil Singh and Tisha Mandavia of Nomura, in a note dated January 05, 2026.
On the bourses, meanwhile, Dixon Technologies shares were trading 0.38 per cent lower at ₹12,002.55 per share at around 10 AM. In comparison, BSE Sensex was trading 0.22 per cent lower at 85,253.50 levels.
Memory price shock hits near-term volumes
Nomura said global memory prices, both DRAM and storage, jumped by around 30-40 per cent quarter-on-quarter (Q-o-Q) in Q3FY26, driven by strong AI server demand, and are likely to rise another 20-30 per cent in H1CY26. This has created supply constraints for the mobile handset segment, which typically operates on lower contract prices, leading to a demand-supply mismatch that could take time to normalise, potentially only by the end of FY27.
Industry checks cited by the brokerage indicate that most mobile handset makers in India, excluding Apple, had already increased prices by about ₹1,000-2,000 per unit by December 2025, with entry-level devices seeing hikes closer to ₹2,000. Nomura expects further price increases in the first half of CY26 if memory prices remain elevated, which could weigh on overall handset demand, estimated at around 155 million units in CY24.
For Dixon, this environment is likely to translate into a soft Q3FY26, as customers such as Transsion and Xiaomi, together contributing nearly 40 per cent of its mobile volumes, are focused on the entry-level segment, which is more sensitive to price hikes. Nomura expects the impact to be felt across both domestic and export markets. CATCH STOCK MARKET LIVE UPDATES TODAY
Estimates cut, margins tweaked
Reflecting the weaker outlook, Nomura lowered its mobile volume assumptions for Dixon to 39 million units for FY26F (36 million excluding Vivo), 57 million for FY27F and 66 million for FY28F, compared with 47 million, 64 million and 73 million earlier. As a result, revenue estimates were cut by 12 per cent for FY26F, 2 per cent for FY27F and 1 per cent for FY28F, partly offset by higher average selling prices.
The brokerage also revised Ebitda margin assumptions to 3.8 per cent for FY26F, 4 per cent for FY27F and 4.7 per cent for FY28F, leading to the sharp EPS downgrades.
Growth recovery hinges on JVs
Despite near-term challenges, Nomura remains constructive on Dixon’s medium-term outlook. It highlighted the upcoming ramp-up of the Vivo joint venture, which is awaiting government approval, and the addition of new customers with an estimated 6 million units of annual volume potential in FY27F. Over the medium term, Nomura expects Dixon to continue commanding a major share of India’s mobile manufacturing landscape, estimating around 35 per cent by FY28F.
With the Vivo and display joint ventures ramping up, Nomura still estimates a robust 54 per cent EPS CAGR over FY26-28F, maintaining its ‘Buy’ rating on the stock.
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