(Rating: ADD, TP: Rs4,752, Upside: 5.3%)
- Dixon's strong growth across business segments was aided by a favourable base, resilient demand for television and manufacturing of Mobile phones under PLI Scheme. Consumer Electronics/Lighting products/Home Appliances/ Mobiles Phones/Security systems grew 263%/98%/193%/476%/462% yoy.
- Gross margins contracted 458bps yoy, and 273bps sequentially. Contraction in gross margin is primarily on the back of lag in passing of increased material costs to customers and change in business mix towards OEM.
- Dixon continues to have a healthy order book position across existing business verticals which will enable it to accelerate growth momentum from Q2 onwards. Dixon continues to add new customers apart from increasing revenue from its existing customers
- Dixon continues to efficiently manage its working capital which continues to be in range of +3 to -3 days. It is expected to incur capex of Rs2000mn in FY22 as it is looking for opportunities in various PLI schemes apart from expanding capacities in its existing business.
- We build-in FY21-24E Revenue/EBITDA/PAT CAGR of 88%/79%/87% and arrive at a PT of Rs4,725 valuing it at 50x FY24 EPS and maintain our ADD rating as stock has seen a strong run-up in recent past and valuations are quite rich.
Shares of Dixon Technologies (India) Ltd was last trading in BSE at Rs. 4424.45 as compared to the previous close of Rs. 4513.1. The total number of shares traded during the day was 36944 in over 3469 trades.
The stock hit an intraday high of Rs. 4447 and intraday low of 4332. The net turnover during the day was Rs. 162269274.