Buy Dixon Technologies; target of Rs 15900: Motilal Oswal

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Mobile segment growth: Dixon Technologies is gaining market share in the mobile segment, with strong volumes of 9.7m in 2QFY27, up 29% QoQ. The company expects to maintain its full-year smartphone volume guidance of 33-34m units in FY27, excluding Vivo JV.
  • IT hardware and telecom expansion: The company is scaling up its IT hardware and telecom businesses, with revenue targets of INR60-65b in FY27 and INR150-200b over the next couple of years. Laptop and tablet volumes are expected to reach 1.3-1.4m units in FY27 and 1.8-2m units in FY28.
  • Backward integration initiatives: Dixon is focusing on backward integration to improve value addition, with the objective of localizing ~25-30% of the BOM through manufacturing of displays, SSDs, mechanical components, and potentially power supplies. This could improve margins by 80-200bp over time.

Thesis Validation Checklist

To validate the investment thesis, investors should watch for:

  • Mobile volume growth: The company's ability to maintain its mobile volume guidance and expand its market share.
  • IT hardware and telecom revenue growth: The company's progress in achieving its revenue targets for IT hardware and telecom businesses.
  • Margin expansion: The company's ability to improve its margins through backward integration and operating leverage.
  • Working capital management: The company's ability to manage its working capital requirements and maintain a healthy balance sheet.