Dixon Tech stock: MOFSL sees 30% upside, flags near-term margin pressure

Motilal Oswal sees 30% upside in Dixon Technologies share price despite near-term headwinds from weak smartphone demand and rising costs. The brokerage has reiterated 'Buy' with ₹14,700 target price

Dixon Tech shares: Motilal Oswal stays bullish; ₹14,700 target implies 30% upside

Analysts at Motilal Oswal Financial Services (MOFSL) predict around 30 per cent upside in Dixon Technologies shares as they believe that while the current environment remains challenging, the company’s long-term growth drivers remain intact. 

The brokerage has reiterated its ‘Buy’ rating on the stock with a share price target of ₹14,700 as it said  “long-term catalysts would outweigh near-term challenges” for Dixon Technologies. 

“Dixon Tech could see near-term pressure on volumes and margins due to rising input costs and a slowdown in the smartphone market. However, structural opportunities in electronics manufacturing services (EMS) and backward integration could drive earnings growth over the next few years,” it said in a recent report. 

 

Near-term pressure from rising costs, weak demand

According to the report, elevated memory prices have emerged as a key headwind for the smartphone industry. The prices have more than doubled since December 2025, prompting smartphone brands to hike prices, particularly in the low- to mid-range segments where Dixon has a dominant share.  

“Nearly eight brands, including Samsung, Oppo, Xiomi, Realme, Nothing, and Vivo, have increased their prices by up to 40 per cent for select models,” the brokerage noted, adding that this has started to weigh on demand.  

Industry data also points to a slowdown, with India’s smartphone sales declining 9 per cent year-on-year in the early part of 2026. This trend is expected to persist, with MOFSL cautioning that “volumes of low- to mid-priced smartphones are expected to be impacted by higher memory prices in the current year.”  

As a result, the brokerage expects Dixon to see pressure on both volumes and margins in the near term. 

MOFSL anticipates margin pressure until the first half of FY27 (H1FY27), especially as production-linked incentive (PLI) benefits taper off.   READ | HDFC AMC jumps 5% post Q4 results; Motilal Oswal retains buy for 18% upside

Backward integration to drive recovery

That said, MOFSL said Dixon’s ongoing backward integration initiatives could drive earnings recovery over the long-term. 

Dixon’s efforts to expand into camera modules mnufacturing, entry into display manufacturing through a joint venture with HKC, and a foray into precision components, it said, may support margin expansion.  

“Benefits of backward integration could start kicking in from H2FY27,” the brokerage said. 

Additionally, regulatory tailwinds, including approvals under the Electronics Components Manufacturing Scheme (ECMS) and a likely nod for the Dixon-Vivo joint venture, could also strengthen Dixon’s manufacturing capabilities and scale over the medium-to-long term. 

Strong growth outlook

Against this backdrop, MOFSL forecasts the Electronic Manufacturing Services (EMS) company to deliver robust growth across key metrics, driven by scale-up in mobile manufacturing and new business segments. 

The brokerage has pencilled in a compound annual growth rate (CAGR) of around 28 per cent in revenue, 32 per cent in Ebitda and 30 per cent in profit after tax over FY25–FY28.  

Margins, too, are expected to improve gradually, with Ebitda margins projected at 3.6 per cent in FY27 and 4.3 per cent in FY28 as integration benefits kick in.  

It projects Dixon’s smartphone volumes at 51.8 million in FY27 and 56.3 million in FY28, if approval for Vivo JV comes during Q1FY27.   READ | Gas stocks rally on US-Iran de-escalation hopes; analysts see limited gains

Dixon Tech stock valuation and investment view

While acknowledging that the stock trades at relatively elevated valuations, MOFSL believes the premium is justified given the company’s growth visibility and strategic positioning. 

“The stock is currently trading at 65.0x/43.4x P/E on FY27E/FY28E EPS,” the brokerage said, maintaining its ‘Buy’ rating with a target price of ₹14,700, based on a 55x P/E multiple on March 2028 estimated earnings.  =================  Disclaimer: View and outlook shared on the stock belong to the respective brokerages and are not endorsed by Business Standard. Readers discretion is advised.