Target: ₹15,500
CMP: ₹14,075
Dixon Technologies’ recent tie-ups and MoU with HP and Asus for the production of PCs, notebooks and laptops under IT hardware PLI 2.0 augur well for scaling up its IT hardware revenues from current levels. The company already has Acer and Lenovo as its anchor clients, with mass production for Lenovo expected to begin in Q3FY25. With these tie-ups, the company is now catering to four out of the top 5 players in laptops.
It is also expected to commence its new facility in 8-10 months. In line with this, the company had guided for a sharp scale-up in IT hardware revenues over FY25-27. In our estimates, we have factored in IT hardware revenues to scale up from ₹140 crore in FY24 to ₹500 crore / ₹2,500 crore / ₹5,000 crore in FY25/26/27.
The company is exploring opportunities in the EV sector, mainly focusing on manufacturing components such as electronic modules and PCB assembly. Further, the company is exploring opportunities to enter the industrial EMS sector and is in advanced discussions with major semiconductor brands to serve their requirements for PCB assembly.
Dixon is already benefiting from PLI schemes in mobile, white goods – AC and lighting, and IT hardware, and is working toward reaching scale and achieving backward integration. The industry has also made representations to the government to incentivise component production in India in order to increase value addition. According to Dixon, the government is currently working on a package for components such as PCB, electro mechanicals, audio and camera modules, etc.
We also expect the company to continue benefiting from the new segments, backward integration, and the ODM mix improvement. We maintain our estimates and roll forward our target price to ₹15,500 on December 2026 estimates. Maintain BUY.