Buy Dixon Technologies; target of Rs 16,400: Emkay Global Financial

Moneycontrol • 1 day ago

Original source

Key Investment Pillars

  • Resilient volumes: Dixon posted strong topline growth in 2QFY27, led by a ~35% yoy rise in ASP, with volumes standing at 9.5mn in 2QFY27.
  • Rising ASPs: The company guided for 3QFY27E volume of 7-7.5mn (+9% yoy) and maintained full-year guidance of 33-34mn ex-Vivo units (flat yoy).
  • Margin expansion: EBITDAM at 2.7% was 26bps below estimate, but the company expects margin recovery aided by PLI and better realizations.
  • New customer additions: Dixon is expected to add 6-8mn units from a new Indian brand customer in FY28.

Thesis Validation Checklist

To validate the investment thesis, watch for:

  • Volume growth: 3QFY27E volume of 7-7.5mn (+9% yoy) and full-year guidance of 33-34mn ex-Vivo units.
  • ASP trends: Continued rise in ASPs, driven by memory taking a larger share of the smartphone BOM.
  • Margin expansion: Recovery in EBITDAM, aided by PLI and better realizations.
  • New customer additions: Addition of 6-8mn units from the new Indian brand customer in FY28.