Here is some good read on Dixon:
What led to Dixon Tech’s electrifying comeback | Value Research (valueresearchonline.com)
Few quick notes:
Dixon clients in mobile manufacturing includes Motorola, Nokia, Samsung, Xiaomi and Jio.
New facility of 3,20,000 square feet being set up in Noida.
In the last five years, revenue from the mobile segment grew at 96 per cent per annum.
Risks: Dependent on China for some key raw materials apart from having Xiaomi as client.
Disclosure: I am invested.
Dixon Tech report excellent Q2 FY23-24 results. Here are some highlighlights
28% Revenue growth YoY & 47% PAT growth YoY
Mobile & EMS division revenue grew by 77% YoY. Security systems revenue grew ~20%
Eventhough Home appliances and Consumer Electonics divisions revenue flat. Lightig products revenue continue to decline huge (~40%).
Hello everyone, I am new to VP and excited to be here. I am a beginner in company analysis and would be great to learn from everyone.
About Dixon - I have been tracking this stock for about 3 months. Things seem fine and future looks to be bright as there would probably be an increase in electronic manufacturing in India. However, I am concerned about the following and would love some advice on:
Are the P/E levels of Dixon high enough right now that they don’t represent the performance and suggest more monitoring?
Revenues might be controlled on a few large customers. Additionally, the margins in this business tend to be on a lower side. Could this hamper the growth of the firm?
Large players like Tata could eat their lunch if they wanted to. How big a concern is this?
The stock price used to be ATH two years back and is back to the same levels now. Are there any precedents of successful trajectories from other companies who have seen this pattern?
Thanks!
What investors look at are future returns, in Dixon’s case why the prices fell 40-50% from its high was because of the miss in the guidance provided by Dixon management. As there was delays and order deferring from few customers Dixon could not achieve revenue targets of the 18000 Cr which was highlighted by their management.
Now as few more customers which have been added like Xiaomi, Jio, Samsung in mobile segment there is visibility into the near future and the mobile segment may grew at faster pace and that’s why it started reflecting in its price.
Coming to the future projections if Dixon is not able to meet the investors expectations of high revenue growth from Mobile and Laptop segments which are high growth segments then it’s price will be punished again.
e682ade9-97b4-466c-a44e-752b4d9e5169.pdf (825.5 KB)
Dixon Technologies’ Wholly Owned Subsidiary Padget Electronics Inaugurates New Manufacturing Plant in Noida
Dixon Technologies Q1 FY25 Analysis: Key takeaways!!
Dixon Technologies has started FY25 on a strong note, with 101% YoY revenue growth to INR 6,588 crores in Q1. The company is well-positioned to capitalize on India’s consumption growth and the “Make in India” initiative. Management expects aggressive growth to continue, driven primarily by the mobile and IT hardware segments.
Strategic Initiatives:
Trends and Themes:
Industry Tailwinds:
Industry Headwinds:
Analyst Concerns and Management Response:
Concern: Sustainability of growth post PLI scheme expiry.
Response: Management expects government to introduce new schemes focusing on value addition and component manufacturing.
Concern: Margin pressure in mobile manufacturing.
Response: Company focusing on backward integration and component manufacturing to improve margins.
Concern: Competition in contract manufacturing space.
Response: Dixon differentiating through scale, customer relationships, and expanding into new product categories.
Competitive Landscape:
Dixon is positioning itself as a leader in electronics manufacturing in India, competing with other EMS players. The company is differentiating through scale, diverse product portfolio, and backward integration initiatives.
Guidance and Outlook:
No specific guidance was provided, but management indicated expectations for “extremely aggressive” growth. The mobile segment is expected to reach 45-50 million units annually in the next couple of years.
Capital Allocation Strategy:
The company plans to invest INR 500-600 crores in capex for FY25, focusing on capacity expansion and backward integration initiatives.
Opportunities & Risks:
Opportunities:
Risks:
Regulatory Environment:
The regulatory environment remains supportive with PLI schemes. Management expects new schemes focusing on component manufacturing to be introduced in the next 9-12 months.
Customer Sentiment:
Strong customer demand reported across segments, especially in mobile phones and IT hardware. The company is expanding relationships with global brands like Motorola, Xiaomi, and Lenovo.
Top 3 Takeaways:
Excellent results reported by Dixon for Q2 2024
Highest ever Quarterly Revenue, PAT reported.
Q-o-Q as well as Y-o-Y PAT reported >200% jump.
Disclosure: Invested.
Drilled down little bit into details and realised that there is an exceptional items of 209 Cr. Even after excluding this item, still Profit Before Exceptional items had a healthy jump from 180 Cr. to 319 Cr.
Great results!!!
had a steep 7.5% drop, post the results. At TTM EPS of 120, PE of 110 isn’t cheap…
At some point, it was a 15% cut…
40k cr guidance
PS - invested
