Dixon Technologies Share Price Rises 2%, as Net Profit rises 47% in Q2

Share price of Dixon Technologies (India) Ltd, opened higher on October, 27 after the company declared its September quarter results, ending September 30, 2023. An electronic goods manufacturer has reported an impressive 47.1% year-on-year (YoY) increase in net profit for the second quarter, jumped to ₹113.4 crore, compared to ₹77 crore in the same quarter the previous year. Consolidated revenue from operations, increasing by 27.83% to reach ₹4,943.18 crore, up from ₹3,866.77 crore a year ago.

At the operational level, Dixon Technologies posted an EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) of ₹198.9 crore, marking a 37% increase from the previous year's ₹145 crore, EBITDA margin stood at 4%, up from 3.8% in the same period last year.

Dixon Technologies reported a 50.52% increase in total expenses for the September quarter, reaching ₹4,797.83 crore.

•    Dixon's revenue from consumer electronics saw a 4% decline, totaling ₹1,440 crore in Q2FY24. 

•    Revenue from Lighting Products dropped by 38% to ₹181 crore.

•    However, revenue from home appliances remained flat at ₹364 crore. 

•    Notably, revenue from the Mobile & EMS Division surged by an impressive 77% to ₹2,819 crore in the September quarter.

Analyst Outlook

According to CLSA, Dixon Technologies has promising growth prospects this positive performance in Q2 can be attributed to increased sales of mobile phones and the acquisition of new contracts with companies like Xiaomi and Itel. CLSA has expressed confidence in the company's future prospects by giving it an "outperform" rating. They have set a target price of Rs 5,675, which suggests a potential 6% increase from the closing price as of October 26.

Dixon Technologies has several solid growth drivers. Their expansion into various segments such as refrigerators, hearables, and wearables presents promising growth opportunities. Also, the company is exploring entry into high-margin industrial electronics markets, including the automotive and defense sectors.

Stock Performance

Dixon's stock has been on the rise recently, with a 3% increase in the past month, including today's gains. Over the last six months, stock has shown impressive growth, surging by 90%. However, on the yearly time frame, stock grew 23%. Zooming out to a five year time frame, Dixon's stock has delivered an astounding 1172% return to its investors. This long-term growth highlights the company's success over the years.

Dixon -Xiaomi Deal

In September, Dixon Technologies India Limited announced a partnership agreement with Xiaomi Technology India Private Limited to manufacture smartphones and related products in Noida, Uttar Pradesh. This move is expected to have implications for the Indian tech landscape since India remains a highly competitive market for global smartphone makers. Xiaomi's decision to engage local partners for manufacturing reflects the growing importance of India in the global tech industry. This is not the first time Xiaomi has engaged with local manufacturers in India, as it awarded a contract to India's Optiemus Electronics Ltd to manufacture Bluetooth neckband earphones, which were previously imported from China.

Final Words

Dixon Technologies has delivered a strong performance in the second quarter of 2023, driven by mobile phone sales and new contracts. The company's focus on diverse electronic segments and potential entry into high-margin markets positions it for continued growth. CLSA remains optimistic about its outlook and recommends it as an investment opportunity.