Shares of Dixon Technologies rose over 1 percent in afternoon trade on Thursday after JM Financial Institutional Securities upgraded the stock to 'buy' from 'add' and raised its target price by 27 percent to Rs 14,200.
The stock was trading at Rs 12,225, up 1.15 percent, in early afternoon trade.
The brokerage said there is no longer a need to downgrade its earnings estimates for Dixon as profits from the company's joint venture with Vivo are expected to start contributing to its profit and loss statement by the end of the September quarter.
According to JM Financial, Vivo sells around 35-37 million smartphones annually in India, with nearly two-thirds of those volumes expected to be manufactured through its joint venture with Dixon. This provides Dixon with an opportunity to produce nearly 24 million smartphones, with the full benefits likely to be reflected in FY28.
The brokerage expects Vivo's share of India's smartphone market to rise from 19.2 percent in FY26 to 24.3 percent in FY27 and 34 percent in FY28, creating a significant growth opportunity for Dixon.
JM Financial also highlighted the company's growing exports and benefits from the production-linked incentive (PLI) scheme, which could help it achieve its smartphone production targets of 63-65 million units in FY28 and 68-72 million units in FY29.
The brokerage noted that Dixon remains on track to achieve its FY27 smartphone volume guidance of around 33 million units, excluding Vivo volumes. It also expects the company's information technology and telecommunications equipment businesses to support growth over the coming years.
Reflecting the improved outlook, JM Financial raised its earnings per share estimates for Dixon by 1-10 percent for FY27-FY29 and increased its FY27 revenue forecast by 3.5 percent.