Dixon Technologies share price rises after Q2; is the stock buy-worthy?

Dixon Technologies share price rose 0.57 per cent to close at ₹5,371.30 on BSE on Friday, October 27, a day after the company reported its July-September quarter (Q2) earnings. 

Dixon Technologies share price hit its 52-week high of ₹5,607.45 last Monday (October 23) and its 52-week low of ₹2,554.95 on January 30 this year. As of the last traded price, the stock has gained about 110 per cent from its 52-week low.

Dixon Tech Q2 Results

After market hours on October 26, Dixon Tech reported a standalone profit of ₹57.25 crore in Q2FY24, down 2.7 per cent against a profit of ₹58.82 crore in the same quarter last year.

Revenue from operations for the said quarter fell 9.6 per cent year-on-year (YoY) at ₹2,072.58 crore against ₹2,293.40 crore in the same quarter last year.

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Brokerages maintain earlier views

Brokerage firms largely maintained their views on the stock after the company's September quarter earnings.

Nuvama Wealth Management has retained its hold rating on the stock on rich valuations but raised the target price to ₹5,150 from ₹3,925.

"We are positive on Dixon’s growth trajectory; however at 50 times PE (price-to-earnings ratio) on FY26E, the valuations do not indicate a good entry point in our view. We are raising FY24 and FY25 PAT estimates by 8 per cent and 25 per cent, respectively," said Nuvama.

Nuvama underscored Dixon’s business model is highly scalable yet profitable, thanks to its frugal cost structure, capital-light intensity and, above all, high manufacturing fungibility. Negative working capital and 10 times asset turns allow Dixon to make about a 30 per cent return on capital. However, a lot of growth runway is captured in the current stock price.

Moreover, Nuvama pointed out that Dixon has a major capex ramp-up plan, which requires significant production mandate from local and global markets and efficient execution. This is coupled with certain demand expectations, and if that demand does not pan out, then it can pose downside risks.

Brokerage firm Nirmal Bang has an 'accumulate' rating on the stock with a target price of ₹5,105.

"We maintain 'accumulate' on Dixon with a revised target price of ₹5,105, valuing it at 41 times September 2025E EPS. While the near-term risks persist in the lighting segment (owing to subdued B2C demand and price erosion), we have strong conviction in the management’s overall execution capabilities over the longer term," said Nirmal Bang.

"We further believe that strong growth from the Mobile and EMS segment and higher backward integration is expected to boost topline and unlock operating leverage benefits," Nirmal Bang said.

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