Dixon Technologies Q1 Review - Mobiles Drove Strong Quarter; IT, Hardware, The Next Big Driver: Systematix

Systematix Research Report

Dixon Technologies India Ltd.’s 1Q revenue/Ebitda/profit after tax surged 101%/88%/108% YoY, driven by mobile and EMS segments (revenue Rs 51.9 billion, up 189% YoY and 68% QoQ). Working capital cycle remained negative (-7 days).

Robust outlook of FY25 is led by mobiles. Approval for Ismartu acquisition is expected in 10 days; thus, ~8 months of consolidation will be effective in FY25. Ismartu, in FY24, clocked Rs 82 billion revenue, Rs 3.5 billion Ebitda and Rs 2.4 billion PAT.

Onboarding of a large global brand is also under process. IT and hardware products have $10 billion addressable market and Dixon aspires to see similar success as in Mobile.

Supply to Acer (laptop) and Lenovo (notebook) has already started. It has recently added two new customers and is in the process to onboard a large global brand. A large campus in Chennai (Rs 500 million capex) will likely be operational in Q1 FY26.

Dixon will continue to explore high growth segments having healthy return on capital employed. We maintain earnings estimates and estimate 47%/45%/58% CAGR in revenue/Ebitda/PAT over FY24-26E.

New customer additions across key verticals, strong traction in mobiles and fast ramp up in new segments (telecom hardware, laptops, refrigerators, washing machine) will drive this growth.

On robust outlook and ~28%/51% RoE/RoIC in FY26E, we maintain Hold with an unchanged target price of Rs 12,483 (80 times FY26E price/earning).

Key risk:

1. Demand slowdown in key user segments,

2. Loss in key customer’s market share.

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