Target: ₹11,000
CMP: ₹12,613.85
Being a key beneficiary of the government’s most successful PLI scheme, the Dixon Technologies (Dixon) stock price has nearly doubled over the past 6M, led by accelerated growth momentum seen in the mobile segment. Staying true to their DNA, Dixon’s mobile capacity (45 million smartphones/40 million feature phones) can cater to 50 per cent of the opportunity pool.
Moreover, their agreement with HKC Corporation to manufacture display modules will further deepen value addition (c.10% of BoM), ensuring customer stickiness. Having acquired the controlling stake in Ismartu (brands like Itel, Infinix, Tecno) along with the partnership with Longcheer (BBK Group brands – Realme, Oppo, Vivo, etc.), Dixon now caters to almost all the top 6 brands within the country.
The ramp-up of volumes with existing customers and new customer additions will help sustain the momentum in the mobile division, which is likely to contribute over 75 per cent of Dixon’s incremental revenue over FY24- 27,
in our view. Although we continue to appreciate Dixon’s execution capabilities, the valuation has turned rich (75x FY26 EPS) after the recent surge in the stock price, limiting potential upside. Hence, we downgrade Dixon to Reduce (from Add ) with a TP of INR 11,000, based on 60x Jun’26 EPS.