Dixon Technologies share price gains over 3%; JM Financial raises target price on the stock, sees 15% more upside

Dixon Technologies share price traded over 3% higher on Thursday led by strong buying momentum. The stock has seen a decent upmove of over 18% in the past one month.

Dixon Technologies shares are up more than 65% year-to-date (YTD) and analysts expect more upside to it on the back of government’s thrust on lowering imports of IT hardware and the Dixon Technologies’ recent contract with Lenovo which is believed to give it a strong head start in IT manufacturing.

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JM Financial has a ‘Buy’ rating on Dixon Technologies and raised the target price on the stock to ₹7,215 per share from ₹5,975 earlier. The revised target price implies an upside of over 15% from Wednesday’s closing price.

Dixon Technologies, through its wholly owned subsidiary Padget Electronics, has entered into a contract with Lenovo to manufacture IT hardware products (laptops, tablets). Recently, Dixon had emerged a successful candidate for the IT hardware PLI scheme 2.0. 

Lenovo commands 19% market share in laptops in India and through this contract Dixon expects to cater to 10- 15% of Lenovo’s volume in FY25, JM Financial noted.

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Additionally, Dixon Technologies has guided for IT Hardware revenue of ₹18-20 billion and ₹40-45 billion for FY25 and FY26 respectively ( ₹1.6 billion in FY23), mainly driven by Lenovo. The company has also guided for cumulative revenue of ₹480 billion from this business over 6 years (starting FY25).

“Dixon’s track record of successfully scaling up its Mobile & EMS division (revenue of ₹46 billion in 1HFY24 vs ₹5.4 billion in FY20) provides confidence in its ability to scale up new businesses. Government’s thrust on localization of IT hardware manufacturing and clear intent to discourage imports is a key support,” JM Financial Services said.

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The brokerage had already factored a scale up in IT hardware revenue for Dixon Technologies the guidance now given by the management is higher than its initial estimate.

“Accordingly, we raise our FY25E/FY26E EPS by 2.4%/5.2%. We also roll forward our price target to 45x FY26E EPS from 45x Sept-25E EPS earlier,” said the brokerage firm.

At 12:20 pm, Dixon Technologies shares were trading 2.83% higher at ₹6,443.25 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.