Dixon Technologies plunges 15% from day’s high amid profit booking post Q2

Dixon Technologies stock price experienced a significant drop, plummeting by as much as 14.57% from its all-time peak to reach an intraday low of Rs 13,668.25 per share on Friday, October 25, 2024.

At an all-time high of Rs 15,999.95, Dixon Technologies’ stock commenced trading.

Investors rushed to secure gains, leading to a decline in Dixon Technologies’ stock value following the announcement of impressive Q2FY25 results. Moreover, the company’s profitability margins suffered, potentially influencing the downward trend of the stock.

In the fiscal year 2025’s September quarter, Dixon Technologies saw a decrease in its Ebitda margin by 30 basis points, dropping to 3.7% compared to 4% in the same quarter of fiscal year 2024.

In the second quarter of the fiscal year 2025, there was a significant 114% increase in Ebitda, soaring to Rs 426.4 crore from Rs 198.9 crore reported in the corresponding quarter of the previous year.

In general, Dixon Technologies witnessed a remarkable 263.2% surge in profit year-on-year, reaching Rs 411.7 crore compared to Rs 113.4 crore recorded in the corresponding quarter of the previous year (Q2FY24). Furthermore, the company experienced a 133% increase in revenue annually, with figures rising to Rs 11,534.1 crore in Q2FY25 from Rs 4,943.18 crore in Q2FY24.

During the quarter, the company also disclosed a remarkable profit of Rs 209.6 crore.

CEO Atul Lall informed CNBC-TV18 that Dixon Technologies is expecting a significant revenue surge in FY25, surpassing the initially projected figures. The company is now looking at revenue figures nearing Rs 40,000 crore, a notable increase from the earlier guidance range of Rs 30,000-32,000 crore.

The company anticipates a rise in its margins to approximately 4.5 percent over the next 18 months, a climb from the existing 3.7 percent.

Do brokerages express their opinion?

In its latest report, Motilal Oswal analysts noted that Dixon Technologies has outperformed market expectations, showcasing a solid performance in the mobile and EMS sectors. They emphasized the successful integration of Ismartu in August 2024 as a contributing factor. Dixon is currently leveraging substantial volumes from its current mobile clientele and engaging in talks to onboard a new international brand, as per the analysts.

Dixon is expected by analysts to further solidify its market presence in various sectors, venture into fresh territories, engage in backward integration, and enhance its ODM assortment. The collaboration with HKC Corp. in the realm of display production is projected to assist the firm in seizing a greater portion of the bill of materials for mobile devices and LED TVs. Moreover, Dixon is actively investigating potential partnerships with international firms to make inroads into open cell manufacturing.

Motilal Oswal has revised its projections upwards by 13%, 5%, and 5% for the years FY25, FY26, and FY27 correspondingly. This adjustment has led to an elevation of its target price to Rs 17,500, all while upholding its ‘Buy’ recommendation.

In the same vein, Nuvama pointed out the remarkable Q2FY25 performance of Dixon, where the profit after tax (PAT) surged by 261% year-on-year to reach Rs 412 crore, driven by investment profits. Furthermore, the adjusted PAT witnessed a 123% annual increase, reaching Rs 255 crore, outperforming expectations by 20%. Analysts at Nuvama emphasized that this performance highlights the exceptional operational proficiency of Dixon.

As a result, Nuvama analysts have adjusted their EPS projections for FY25–27, elevating them by as much as 23 percent to mirror the Q2 performance and future expansion prospects. Their assessment values Dixon at 65 times the projected EPS for December 2026, culminating in a target price of Rs 16,100. Despite this, they have maintained a ‘Hold’ recommendation, citing constrained upward potential.