Dixon Technologies Q3 Results Review - Strong Execution; Upgrade To Add: Yes Securities

Yes Securities Report

Dixon Technologies India Ltd.'s has delivered beat on revenue front as Mobile phones and electronic manufacturing services business has seen continued strong demand from new as well as existing customers increasing the volume off take.

Mobile phone and EMS division has grown by 251% on YoY basis. Increased order from Motorola for exports as well as on boarding large new customer will bode well of this division going forward.

Other key business-like lighting and television has seen demand challenges, with home appliances witnessing double digit growth.

Management has been able to navigate subdued demand environment by adding new customers/products in existing business verticals and focusing on the new segment.

We believe Dixon will continue to deliver strong growth in the medium term as it has been-

1. able to add new customers on consistent basis;

2. New product category like refrigerator and IT hardware to start meaningful contribution from next fiscal;

3. Increasing original design manufacturer offering by providing new technologically advanced solutions;

4. tapping exports opportunities and

5. Investing in backward integration to improve efficiency.

On the margin front, company is looking to improve its margin by increasing scale, backward integration, and cost optimisation initiatives. The company is also prudent in employing its capital and constantly endeavoring to improve its return ratios.

We have maintained our target multiple to 55 times considering improved performance and confidence exuded by the management of getting new customers on board.

We however upgrade the stock to 'Add' company continues to deliver strong and quality growth navigating the challenges.

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