IGI Logo

Result Synopsis

Revenue growth has been marginally above expectation as Mobile phones and EMS business has seen continued strong recovery with new as well as existing customers increasing the volume off take. Dixon is in advance talks with two new customers which it is confident of getting onboard by Q4. Other key business-like lighting, television and home appliances is witnessing demand challenges resulting muted performance. Management has been able to navigate subdued demand environment by adding new customers/products in existing business verticals and focusing on the new segment. We believe that worst in terms of revenue performance is behind as company has been 1) able to add new customers on consistent basis; 2) New product category like refrigerator and IT hardware to start meaningful contribution from next fiscal; 3) Increasing ODM offering by providing new technologically advanced solutions and 4) tapping exports opportunities. On the margin front, company is looking to improve its margin by increasing scale, backward integration, and cost optimization initiatives. The company is also prudent in employing its capital and constantly endeavoring to improve its return ratios. We have increased our target multiple to 55x considering improved performance and confidence exuded by the management of getting new customers on board. We however remain Neutral on the Stock has priced all the positives and there is very limited room for upside from the current levels

Dixon has been able to deliver better than expected revenue performance Going forward Dixon is expected to register improved performance given increasing order book, customer addition and capacities in place. We now build-in FY23-25E Revenue/EBITDA/PAT CAGR of 32%/35%/43%, we have increased our revenue estimates, while we maintained our margin estimates and arrive at a PT of Rs5,458 valuing the company at 55x. We however continue to remain Neutral on the stock as positives have been priced in and there is limited upside from current levels.

Result Highlights

* Quarter summary – Dixon delivered better than expected growth as company has registered strong growth in its key category of mobile phones (+76.8%); while other segments have been subdued.

*-Margin – EBITDA margin have improved on yoy basis, while it is flattish on sequential basis. Higher operating leverage and backward integration has played a key role margin improvement.

*Guidance – The company has refrained from giving any guidance; however, it is confident of strong growth rates continuing in coming quarters on new customer additions and improving order-book.

* New Client additions -Company continues to add new clients and is in advance talks with two new global clients for its mobile phone as well as laptop vertical. It has also been able to get additional business from its existing clients.

Please refer disclaimer at https://yesinvest.in/privacy_policy_disclaimers
SEBI Registration number is INZ000185632