Buy Dixon Technologies; target of Rs 14,700: Motilal Oswal

About this update from Dixon Technologies (india) Ltd.

Motilal Oswal's research report on Dixon TechnologiesConsidering high memory prices, several smartphone players have started increasing prices to pass on higher costs. As expected earlier, this is likely to impact overall volumes of smartphone markets, particularly low and mid-range smartphones. This would result in Dixon’s volumes converging toward the second scenario as highlighted in our earlier report. We had aligned our estimates with these volumes at the time of previews. Despite the volume impact, we see positives in 1) government relaxing PN3 approval process, thereby hoping that Dixon-Vivo JV will be approved soon; 2) approval for 74:26 JV of Dixon with HKC for display modules; and 3) ECMS approval for Dixon’s display modules. In the next 2-3 quarters, Dixon will see the impact of lower volumes and margins amid the end of PLI benefits, after which backward integration benefits will boost margins.OutlookWe reiterate BUY with a TP of INR14,700, implying 55x P/E multiple on Mar’28E EPS.Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Dixon Technologies - 1704026 - moti

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