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Dixon Technologies plunges 15% from day's high amid profit booking post Q2

Dixon Technologies stock had opened at a record high of Rs 15,999.95.

Dixon Technologies, phone circuit, phone

Photo: Bloomberg

Tanmay Tiwary New Delhi

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Dixon Technologies share price: Shares of Dixon Technologies tanked up to 14.57 per cent from record high to hit an intraday low of Rs 13,668.25 per share on Friday, October 25, 2024. 
 
The Dixon Technologies' stock had opened at a record high of Rs 15,999.95.
 
The drop in Dixon Technologies share price came as investors flocked to book profits after the company reported better-than-expected Q2FY25 results. Additionally, the company’s margins took a hit, which may have also contributed to the stock's fall.
 
Dixon Technologies’ earnings before interest, tax, depreciation and amortisation (Ebitda) margin squeezed 30 basis points (bps) to 3.7 per cent in the September quarter of FY25, from 4 per cent in the September quarter of FY24. 
 
 
Its Ebitda jumped 114 per cent annually to Rs 426.4 crore in Q2FY25, from Rs 198.9 crore in the same quarter a year ago.
 
Overall, Dixon Technologiess profit skyrocketed 263.2 per cent year-on-year (Y-o-Y) to Rs 411.7 crore, as against Rs 113.4 crore in the same quarter a year ago (Q2FY24). The company’s revenue climbed 133 per cent annually to Rs 11,534.1 crore in Q2FY25, from Rs 4,943.18 crore in Q2FY24. 
 
The company also reported an exceptional gain of Rs 209.6 crore during the quarter.
 
Outlook 
Dixon Technologies anticipates that FY25 revenue will considerably exceed its guidance, CEO Atul Lall told CNBC-TV18. He also expects revenue to approach Rs 40,000 crore, compared to the previously guided range of Rs 30,000-32,000 crore. 
 
Additionally, the company projects that its margins will increase to around 4.5 per cent within the next 18 months, up from the current level of 3.7 per cent.
 
What do brokerages say? 
Analysts at Motilal Oswal said that Dixon Technologies delivered better-than-expected results, driven by robust performance in the mobile and EMS segments, along with the integration of Ismartu from mid-August 2024. They highlighted that Dixon is benefiting from strong volumes from existing mobile customers and is actively discussing the addition of another global brand. 
 
Analysts anticipate that Dixon will continue to strengthen its market position across segments, expand into new areas, pursue backward integration, and improve its ODM mix. The partnership with HKC Corp. for display manufacturing is expected to help the company capture a larger share of the mobile and LED TV bill of materials. Additionally, Dixon is exploring collaboration opportunities with global players for entry into open cell manufacturing.
 
As a result, Motilal Oswal has raised its estimates by 13 per cent, 5 per cent, and 5 per cent for FY25, FY26, and FY27, respectively, and increased its target price to Rs 17,500, while maintaining a ‘Buy’ rating.
 
Similarly, Nuvama highlighted a strong performance from Dixon in Q2FY25, with PAT soaring 261 per cent Y-o-Y to Rs 412 crore, boosted by investment gains, while adjusted PAT rose 123 per cent annually to Rs 255 crore, surpassing estimates by 20 per cent. The performance underscores Dixon’s exceptional operational execution, analysts at Nuvama opined. 
 
Consequently, Nuvama analysts have increased their FY25–27 EPS estimates by up to 23 per cent to reflect Q2 results and the growth outlook. They now value Dixon at 65 times the December 2026 estimated EPS, resulting in a target price of Rs 16,100, and have retained a ‘Hold’ rating due to limited upside potential.
 

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First Published: Oct 25 2024 | 10:23 AM IST

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