Dixon Technologies share on a bull run; Check the factors here

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Dixon Technologies share on a bull run; Check the factors here
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Dixon Technologies Limited is the largest company engaged in manufacturing products in the consumer durables, lighting, and mobile phone markets in India.

Dixon Technologies Ltd, the world’s fourth-largest and India’s biggest LED light manufacturer, has seen its shares rise by 15% in the last month and gain 39% year-to-date.

The company’s diverse product portfolio includes consumer electronics, home appliances such as washing machines, lighting products like tube lights and downlighters, mobile phones, and more.

The company shares have gained 65% in the last six months and gained 177% in the last 12 months.

On May 16th, Dixon Technologies Limited signed a Memorandum of Understanding (MoU) with Acerpure India CE Private Limited (“Acerpure”) to manufacture a range of consumer appliance products. Under this agreement, Dixon Technologies will begin producing Acerpure products, starting with cutting-edge TVs, once definitive agreements are signed.

Furthermore, on February 23, 2024, Dixon Technologies inaugurated a new manufacturing unit in Dehradun, Uttarakhand, dedicated to producing washing machines, enhancing the company’s annual production capacity to 2.4 million units.

Dixon Technologies Ltd. has seen impressive growth, with its shares surging by 66% over the past six months and a staggering 204 % over the last year.

During Q4 FY24, the company’s revenue surged by 52 percent, increasing from Rs 3,065 crores in Q4 FY23 to Rs 4,658 crores. Net profit also saw a notable rise of 21 percent, going from Rs 80 crores to Rs 97 crores.

In Q4 FY24, the company reported an EBITDA margin of 4.3%, which is a decrease of 90 basis points from 5.2% in Q4 FY23. Meanwhile, the PAT margin declined by 50 basis points to 2.1%.

Dixon Technologies Limited is the largest manufacturer in India of consumer durables, lighting, and mobile phone products. Their diversified product portfolio includes consumer electronics, home appliances like washing machines, lighting products such as tube lights and downlighters, and mobile phones, among others.

In the previous fiscal year, domestic revenue made up 91 percent of the company’s total revenue, with export sales contributing 9 percent. For the current fiscal year, the company has allocated Rs 450 million for capital expenditure.

The company commands significant market shares, including 35% in LED TVs, 30% in washing machines, 25% in security surveillance systems, and 50% in lighting solutions. Notably, Dixon Technologies Ltd. stands as the fourth-largest LED light manufacturer globally and holds the top position in India, specializing in LED lamp production.

The company generates 46% of its revenue from the Mobile & EMS Division, 32% from Consumer Electronics & Appliances, 9% from Home Appliances, 9% from Lighting Products, and 4% from the Security Systems division.

Dixon Technologies currently operates 17 manufacturing facilities spanning a total of 2.5 million square feet, with plans to expand to 23 plants covering 4.8 million square feet by FY 2024.

The company holds a market share of 35% in LED televisions, 30% in washing machines, 25% in security surveillance systems, and 50% in lighting solutions.

Dixon’s price-to-earnings (P/E) ratio stands at 145.4, significantly higher than the industry average of 67.55, indicating that the company’s shares are trading at a premium. The company also has an earnings per share (EPS) of 61.47.

Morgan Stanley (NYSE: MS ) forecasts a compound annual growth rate (CAGR) of 42% for Dixon’s earnings from FY 2024 to FY 2028. Additionally, Morgan Stanley noted that Dixon has secured large mobile customers in the past six months and plans to invest $30 million in manufacturing display modules for mobiles. However, they highlighted concerns regarding the company’s ability to meet its guidance and maintain low working capital.

International brokerage firm CLSA has given Dixon Technologies with a target price of Rs 9,000 per share. CLSA believes that growth from new initiatives such as the rapid scaling of laptops and tablets, backward integration, and industrial EMS could further drive the company’s growth.

On May 18, the shares of India’s second-largest mobile phone manufacturer gained 8 percent and closed at Rs 9,024.95 per share. The company has a market capitalization of Rs 53,524 crore.

Written by Omkar Chitnis

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