Dixon Technologies Targets 44% Return On Capital In Next 15 Months
Chief Financial Officer Saurabh Gupta expects the Dixon Technologies' backward integration plans to give its ROC a major boost.
Leading electronics manufacturing services provider Dixon Technologies India Ltd. aims to increase its return on capital to above 40% in the next 15 months, supported by its mobile and IT hardware business, according to the company's Chief Financial Officer Saurabh Gupta.
He told NDTV Profit that the company's backward integration plans will also give its ROC a major boost.
"In the last one year, we have expanded the ROCs from 30% to 38.9% and we feel that given (that) the asset turns in both mobile and IT hardware business and strong margins in backward integration, the ROC profile can continue to expand," he said.
Commenting on the projection for the company’s ROC, Gupta added, "I am very confident that in the next 12–15 months, it can be anywhere in the range of 42–44%. So, it can further expand, because IT hardware is a very high asset turn business and you really need to manage your working capital. We have been doing well on that thing so far.”
Gupta noted that the company will focus on exports and the addition of more categories within its current portfolio to fuel growth.
Dixon Technologies' net profit for the September quarter in the financial year 2024–25 grew 265% year-on-year to Rs 412 crore. It had reported a net profit of Rs 113 crore in the corresponding quarter of the preceding fiscal. Q2 revenue from operations has more than doubled to Rs 11,534 crore, up from Rs 4,943 crore a year ago.
Gupta credited the strong performance to the company's mobile business and the acquisition of a majority stake in Ismartu India, a firm engaged in electronic and mobile device manufacturing. Ismartu operates in India under the ‘Itel’, ‘Infinix’ and ‘Tecno’ brands.
“Mobile is doing very well. We have been able to get a large set of customers on the Android ecosystem and the acquisition of Ismartu, which happened during mid-August, has also been playing out. We are looking for some more customer additions in this category (mobile) and deepening the level of manufacturing by getting into display precision components and mechanicals. The IT hardware should also start delivering by next fiscal,” Gupta said.
Despite the strong growth numbers, Dixon Technologies closed 7.4% lower at Rs 13,939 apiece on the NSE compared to 0.9% drop in the benchmark Nifty on Friday.
