Dixon Technologies stock hits record high, soars 200% since February in bullish streak

Extending their winning streak for the fourth consecutive trading session on December 13, shares of Dixon Technologies (India) surged by another 2%, crossing the ₹18,000 mark for the first time and hitting a fresh record high of ₹18,034 per share.

The company’s stock has been on a consistent bull run since February 2024, closing each month in positive territory and delivering stellar returns to its shareholders. During this period, the stock has risen from ₹5,991 to the current trading price of ₹17,960, marking a remarkable gain of 200%.

This surge in stock performance mirrors the rapid growth of the Indian EMS sector, which is emerging as a key manufacturing and export hub. The sector’s expansion is driven by favourable government policies, including the Production-Linked Incentive (PLI) scheme and the Scheme for Promotion of Manufacturing of Electronic Components and Semiconductors (SPECS), coupled with India’s cost competitiveness, robust infrastructure, and skilled labour force.

The momentum has been further accelerated by the “China+1” strategy, which is enhancing India’s manufacturing capabilities on the global stage.

The company has recently onboarded Google to manufacture its flagship premium phone brand, Google Pixel, and HP and Asus for manufacturing its products locally. The IT hardware business is expected to be a significant growth driver, as the top four global brands are in a tie-up with Dixon for manufacturing laptops.

Dixon has already started manufacturing for Acer. To cater to upcoming demand, Dixon has set up a plant in Chennai with a capacity of 2 million units, which would be operational by Q4 FY25. Dixon is targeting revenue of ₹3,500-4,000 crore by FY2026. The total capex outlay for the Chennai unit is at ₹150 crore.

According to the domestic brokerage firm Sharekhan, the Indian electronics and consumer durable industry worth ₹4,00,000 crore is proliferating. Manufacturing can be a significant growth driver from a medium- to long-term perspective, providing enormous opportunities owing to the shift in manufacturing bases outside China and the government’s incentives to enhance manufacturing through the Make in India initiative, like the PLI scheme, which aims to kick-start the process with strong industry participation.

Company Outlook – Client addition and margin expansion would be key growth catalysts

Sharekhan highlighted that Dixon’s leadership position gives it a significant advantage in the electronic outsourcing business. The brokerage also noted that the company’s Tirupati facility is poised to play a key role in driving growth by exploring new business verticals, expanding the product offerings within existing verticals, and increasing its presence in South India through partnerships with original equipment manufacturers (OEMs) and the acquisition of new clients.

The expanded capacity in consumer electronics and home appliances, coupled with a PLI scheme license for mobile phones, is likely to drive revenue growth momentum. Meanwhile, margins may expand due to the lighting business’s economies of scale and automation.

The brokerage also mentioned that the company is applying for PLI schemes in IT (laptops, tablets, and hardware); lighting (extrusions, batons, plastics, and mechanicals); AC components; and telecom (modems, routers, and IoT devices), all of which bode well for long-term growth opportunities.

Amid strong growth levers, the brokerage maintained its ‘buy’ rating on Dixon with a revised price target of ₹18,800, modeling a revenue and PAT CAGR of 53% and 69% over FY2024-FY2027E.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.