Dixon Tech Surges on Profit Outlook as JM Financial Raises Target Price by 27%
Dixon Technologies stock saw a significant uptick in afternoon trade on Thursday, rising over 1 percent. This surge came following the highly positive rating upgrade provided by JM Financial Institutional Securities. The brokerage upgraded the stock from 'add' to 'buy', concurrently raising its target price substantially.The company was trading at Rs 12,225 during the early afternoon session, showing a gain of 1.15 percent. The targeted price set by JM Financial rose by 27 percent, reaching Rs 14,200, reflecting the improved profitability outlook for Dixon.
Key Catalyst: JM Financial Boosts Target After Vivo Joint Venture News
JM Financial explained that there is no longer a necessity to downgrade its earnings estimates for Dixon Technologies. Profits generated from the joint venture with Vivo are expected to begin contributing to the company's profit and loss statement by the end of the September quarter.This partnership presents a major growth opportunity for Dixon. JM Financial noted that Vivo sells approximately 35 to 37 million smartphones annually in India. Nearly two-thirds of these volumes are anticipated to be manufactured through Dixon’s joint venture, offering Dixon an opportunity to produce around 24 million smartphones.
Future Growth Vectors: Market Share and Exports Driving Outlook
The brokerage projects substantial growth driven by the increasing dominance of Vivo in the Indian smartphone market. JM Financial expects Vivo's share of this market to climb from 19.2 percent in FY26 to 24.3 percent in FY27, potentially reaching a significant 34 percent in FY28.Beyond the domestic partnership, JM Financial highlighted two key factors boosting Dixon’s future prospects: growing exports and benefits derived from the production-linked incentive (PLI) scheme. These factors are expected to aid the company in achieving ambitious production targets.
Production Targets and Financial Upgrades
The brokerage has set strong smartphone production targets for Dixon. The company is aimed at producing 63 to 65 million units in FY28 and a challenging 68 to 72 million units in FY29, benefiting from these incentives. JM Financial also noted that Dixon remains on track to meet its FY27 smartphone volume guidance of approximately 33 million units, excluding the volumes generated by Vivo.Looking ahead, the company’s diversified business segments are also a focus for growth. The information technology and telecommunications equipment businesses are expected to continue supporting overall expansion in the coming years. Reflecting this vastly improved outlook, JM Financial increased its FY27 revenue forecast by 3.5 percent. They also raised their earnings per share estimates for Dixon by 1 to 10 percent across FY27 through FY29.
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