Dixon Tech Shares Hit 10% Lower Circuit After Q3 Results

Dixon Technologies Shares Hit 10% Lower Circuit After Q3 Results: What Should Investors Do?

Dixon Tech Stock Tumbles

Dixon Technologies' shares experienced a sharp decline in intraday trading, hitting a 10% lower circuit at ₹15,799.05 on the BSE on Tuesday, January 21. This drop occurred despite the company reporting a 124% jump in its December quarter consolidated net profit, which reached ₹217 crore, compared to ₹97 crore in the same quarter last year.

Q3 Financial Highlights

The company's revenue from operations in Q3FY25 stood at ₹10,461 crore, a significant 117% increase from ₹4,821 crore reported in the corresponding quarter of the previous financial year. Dixon Tech also reported a 113% increase in its Earnings Before Interest, Taxes, Depreciation, and Amortisation (EBITDA) at ₹398 crore, compared to ₹187 crore in Q3FY24. However, the EBITDA margin was down 10 basis points at 3.8% in the reported quarter versus 3.9% in Q3FY24. The PAT margin was up by 10 basis points at 2.1% in the reported quarter compared to 2% in the same period last year.

Analyst Recommendations

Here’s what analysts are recommending for Dixon Tech's stock:

• Jefferies: Jefferies maintained its 'Underperform' rating on Dixon Technologies with a target price of ₹12,600. They acknowledge the earnings beat but caution that the risk-reward remains stretched due to the company’s high FY26 P/E of 106x. They also note that despite being a non-branded B2B EMS player, Dixon trades at a premium compared to branded B2C companies. Jefferies estimates a strong sales/PAT CAGR of 45%/49% over FY24-FY26, with operating margins expected to remain stable at 4%. Their target P/E of 53x aligns with historical averages for the company.
• Nuvama: Nuvama maintained its 'Hold' rating on Dixon Technologies with a target price of ₹18,790. While the firm noted a 117% YoY revenue growth, primarily driven by the Mobile and EMS segments, they have revised their FY25-27 estimates downward by 3%-7% due to factors such as Ismartu consolidation, the Vivo JV, and muted demand in consumer appliances. Additionally, Dixon's plans to enter display fab manufacturing, capitalizing on available incentives, were also noted.

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