Dixon, Amber - Crafting Precision In Every Circuit; Motilal Oswal Initiates Coverage With A 'Buy' Rating

NDTV Profit’s special research section collates quality and in-depth equity and economy research reports from across India’s top brokerages, asset managers and research agencies. These reports offer NDTV Profit’s subscribers an opportunity to expand their understanding of companies, sectors and the economy. .Motilal Oswal Report.We initiate coverage on Dixon Technologies India Ltd. and Amber Enterprises India Pvt. Ltd. with a Buy rating as these companies have already achieved market leadership in their key domains and are now concentrating on expanding their presence across different segments and backward integration..Dixon Technologies - Pioneering the future of manufacturing and electronics Dixon Technologies has emerged as a fast-growing diversified player in the electronics manufacturing services industry. Dixon is a key beneficiary of several production-linked incentive schemes for mobile phones, IT hardware, white goods, lighting and AC components. It has consistently increased its market share in different segments with either new technology tie-ups or new client additions. Its recent tie-up with HKC Corp for manufacturing of displays for mobile phone, TVs and automotive, Longcheer Group for mobile phones, stake purchase of Ismartu and sublicensing arrangement with Google done last year for TVs will help the company maintain its market leadership position. We expect Dixon to continue to keep focusing on new segments, backward integration, original design manufacturing mix improvement and operational efficiencies to boost its margin despite a rising revenue contribution of the low-margin mobile segment. We estimate a CAGR of 44%/51% in revenue/PAT during FY24-27. We believe that an efficient working capital cycle, focus on capital allocation and higher asset turnover ratios should result in RoE/RoCE of 33%/36% by FY27E. We initiate coverage with a Buy rating on the stock with target price of Rs 15,000 based on DCF. Valuations are on the higher side but strong industry growth drivers, presence in fast growing segments, possibility of adding more segments and best in class RoICs will keep valuations higher.Key risks and concerns Key risks to our estimates and recommendation would come from lower than expected growth in the market opportunity, loss of relationship with key clients, increased competition, and limited bargaining power with clients..Amber Enterprises - Moving beyond cyclicality! Amber Enterprises is a leading player in ODM/OEM solutions for the Indian room AC industry. The company is one of the beneficiaries of PLI scheme with an early mover advantage in PLI-led capex for RAC and AC components. With strategic diversification towards the high-growth electronics market (especially printed circuit board manufacturing) and increasing scope of work in the mobility segment, we expect Amber to benefit from margin improvement. We expect the company’s transition from Amber 1.0 (AC-focused) to Amber 2.0 (electronics) and Amber 3.0 (mobility) to reduce business cyclicality, and result in improved asset turnover and return ratios after the initial few years of capex. We expect a revenue/ Ebitda/PAT CAGR of 21%/26%/50% over FY24-27, which is likely to be driven by mid-teens CAGR in the consumer durable segment, high growth in the electronics and mobility segments, along with a 100 bp margin improvement over FY24-27. We initiate coverage on Amber with a Buy rating and a DCF-based target price of Rs 5,000, implying 42x P/E on two-year forward EPS (Sep’26).Key risks and concerns Lower-than-expected demand growth in the RAC industry, change in BEE norms making products costlier, and increased competition across RAC, mobility, and electronics segments..Click on the attachment to read the full report:.DISCLAIMERThis report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit..Users have no license to copy, modify, or distribute the content without permission of the Original Owner.

Dixon, Amber - Crafting Precision In Every Circuit; Motilal Oswal Initiates Coverage With A 'Buy' Rating

The companies have already achieved market leadership in their key domains and are now concentrating on expanding their presence across different segments and backward integration, says the brokerage.

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Dixon, Amber - Crafting Precision In Every Circuit; Motilal Oswal Initiates Coverage With A 'Buy' Rating

The companies have already achieved market leadership in their key domains and are now concentrating on expanding their presence across different segments and backward integration, says the brokerage.

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