Broker’s Call: Dixon Technologies (Buy)
Keynote Capital
Dixon Technologies (India) reported a robust 21 per cent year-on-year revenue growth in Q1 FY27, despite gross margin and EBITDA margin declines of 165 bps and 78 bps, respectively. The margin pressure stemmed from the expiry of Mobile PLI 1.0 incentives and inflationary pressures impacting electronic components. Despite these challenges, cost-plus contracts and input cost pass-through mechanisms helped maintain revenue growth, particularly in mobile volumes, excluding Vivo, which are expected to remain stable at 32-33 million units.
The company anticipates a 20-25 percent sequential volume growth for Q2 FY27, driven by market share gains and a strong order-book. The Vivo joint venture is set to commence operations in Q3 FY27, while the company is expanding across IT hardware, camera modules, and telecom sectors, poised to become the next key growth drivers as the mobile business matures.
Despite near-term margin weaknesses, the growth outlook remains strong, supported by telecom, IT hardware, and the integration of camera modules, fingerprint modules, and display assembly. Given these factors, the target price is set at ₹16,608, maintaining a BUY rating.
Written by urgent.news from Hindu BusinessLine's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
