Dixon Technologies well-poised to benefit from PLI 2.0, says Nomura

The brokerage added that Dixon Tech's ramp-up in information technology (IT) hardware and telecom remains on track and could support growth

Nomura believes Dixon Technologies appears well-positioned to benefit from production-linked incentive (PLI) 2.0, given its ongoing push toward higher value addition through joint ventures in components—camera modules (already operational) and display modules through the HKC 76:24 joint venture (JV) (awaiting government approval; plant expected to be operational by Q2 FY27). 

 

The brokerage noted that the quantum of benefits could be limited if PLI 2.0 is designed only for incremental exports, as Dixon’s export share is estimated at about 10 per cent/8 per cent of FY26F/FY27F revenues, but could be higher if incentives are extended to total production.

 

Additionally, the Vivo joint venture (JV) approval will remain a key stock catalyst, potentially offsetting weakness linked to demand softness amid high memory prices. The brokerage added that Dixon’s ramp-up in information technology (IT) hardware and telecom remains on track and could support growth.

 

 

The brokerage reiterated its ‘Buy’ call on Dixon Technologies with a target of ₹14,678 per share.

 

At 10:33 AM, Dixon Technologies’ share price was trading 1.23 per cent lower at ₹10,409.5 per share on BSE. In comparison, Sensex was down 1.21 per cent at 80,301.55.

 

Apart from Dixon Tech, Nomura believes multiple manufacturers and contract manufacturers, including Foxconn, Tata Electronics, Apple, Samsung, Bhagwati (Micromax), and Lava will also benefit. 

PLI 2.0 details

The government is in discussions with smartphone manufacturers to launch ascheme 2.0, as the current PLI programme is set to end on March 31, 2026, noted Nomura. Based on media reports, the new scheme could commence from April.

 

The brokerage reckons that the government is keen on a new incentive framework to protect India’s smartphone export momentum and competitiveness, particularly as India still faces an 11–14 per cent cost-of-manufacturing disadvantage compared to China (down from 18–19 per cent around 4–5 years ago).  The brokerage added that policymakers are also focused on building a domestic component ecosystem, noting that the government’s component push has drawn strong interest and led to an increase in the incentive outlay to ₹40,000 crore from ₹23,000 crore in the latest budget, to be spent over five years.    Disclaimer: Views and recommendations are those of the brokerage/analyst and are not endorsed by Business Standard. Readers should consult a financial adviser before taking investment decisions.