The share price of Dixon Technologies fell over 6% in intraday trade today despite the company delivering a strong Q4 performance. Furthermore, the brokerage firm JM Financial downgraded its rating on the electronics manufacturing giant from ‘Buy’ to ‘Hold’ and also trimmed its target price.
Let’s take a look at why the brokerage has taken a cautious stance.
JM Financial on Dixon Technologies: What is the new target?
According to JM Financial, Dixon Technologies is now rated ‘Hold’ with a revised target price of Rs 15,650, down from the earlier estimate of Rs 16,500. The brokerage believes that the stock’s high valuation currently leaves little room for further upside, especially in light of certain delays and industry uncertainties.
Dixon reported a strong operational performance in Q4FY25. Revenue grew 121% year-on-year to Rs 10,300 crore, largely driven by a 3x surge in the mobiles and EMS business. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) also jumped 143% YoY to Rs 440 crore, aided by operating leverage and margin expansion.
Despite the growth, adjusted profit after tax (PAT) stood at Rs 199 crore, slightly below expectations, mainly due to higher tax outgoes and adjustments for one-off gains.
JM Financial on Dixon Technologies: The big opportunity and the bigger delay
Dixon has several growth opportunities lined up including a joint venture with Vivo and a tie-up with HKC for manufacturing display sub-assemblies. However, both these projects have now been pushed back, as per the brokerage house report.
As per JM Financial, “the delay in commencement of production with Vivo (4QFY26 now vs. 2QFY26 earlier) and display sub-assemblies with HKC (4QFY26 now vs. 2QFY26 earlier)” raises concerns about the timing of revenue realisation.
While export opportunities with global players like Motorola and Ismartu continue to look promising, these delays have prompted a downward revision of Dixon’s earnings forecasts for FY26-27 by 6-7%, the brokerage said.
JM Financial on Dixon Technologies: Competition could heat up post-PLI
Another key worry flagged by JM Financial is the uncertainty around the government’s Production-Linked Incentive (PLI) scheme, which is scheduled to end next calendar year.
“With the large-scale electronics PLI ending, the industry will become a level playing field for all peers, some of which have scaled up well,” the report noted. It added that Dixon’s mobile revenues have already shown a sequential decline in Q3 and Q4, hinting at margin pressures in the coming quarters.
Dixon Technologies share price
In the last 5 days, the share price of the company declined by 4%, and in the past month, it declined marginally by 1.5%. Looking at a broader time frame, the stock has surged 3.5% over the past six months and delivered a whopping 70% return over the last one year. However, on a year-to-date (YTD) basis, it has declined by 14%.