Dixon Technologies' shares plunged as much as 7.8 per cent despite strong Q4 results. Read on to learn what brokerages say
Shares of Dixon Technologies plunged as much as 7.8 per cent in early trade on May 21 after the electronics manufacturer reported its fourth quarterly results for the fiscal year 2024-25 (Q4 FY25). As of 11:45 AM, the stock traded at Rs 15,555 per share on the NSE, down 6.10 per cent. During the session, it touched an intraday low of Rs 15,270 apiece.
Dixon Technologies is the largest home-grown contract manufacturer of electronics products, mainly mobile phones.
The decline in stock comes despite the company reporting a sharp 322 per cent year-on-year (YoY) jump in its consolidated Q4 profit after tax (PAT) to Rs 401 crore. It was Rs 95 crore in the year-ago quarter. For the full year FY25, PAT came in at Rs 1,096 crore as against FY24's 368 crore, a jump of 198 per cent YoY.
Its consolidated revenue from operations for Q4 came in at Rs 10,293 crore, up 121 per cent from Rs 4,658 crore in the year-ago period. For the full year FY25, revenues came in at Rs 38,860 crore as against Rs 17,691 crore, a jump of 120 per cent YoY.
Expenses also grew 120 per cent, in tandem with its revenues. Despite the higher costs, Dixon improved its operating profit margin to 4.3 per cent in Q4, up from 3.9 per cent a year ago. However, for the full year, margins stayed flat at 3.9 per cent.
The company's Board also recommended a final dividend of Rs 8 per share.
Mobile and other electronics manufacturing services (EMS) division contributed 88 per cent of the revenues in Q4, up from 66 per cent contribution in the year-ago period. The segment's profit contributions also grew to 79 per cent, up from 57 per cent in last year's corresponding quarter.
Consumer electronics and appliances revenue contribution dipped to 7 per cent in Q4 from previous year's 19 per cent and profit contribution too shrunk to 10 per cent from 16 per cent.
Home appliance segment contributed 3 per cent for the quarter, down from 6 per cent. The segment's profit contribution also halved to 8 per cent from previous year's 16 per cent.
Similarly, Lighting products segment contributed just 2 per cent revenues, down from 4 per cent in the year-ago quarter, while its profit contribution dipped to 3 per cent from 8 per cent in the year-ago period.
Dixon Tech FY26, FY27 Guidance
Dixon's management has set a target to manufacture 43 million to 44 million smartphones in FY26 and increase this number to 60 million to 65 million in FY27, the company's managing director and Vice-Chairman Atul Lall said in a post-earnings analysts conference call on May 20.
In FY25, the company manufactured around 28.3 million smartphone units, much higher than the 6.4 million smartphones made in FY24.
Yes Securities said that Dixon's Q4 performance was a mixed bag—revenue came in below expectations, but EBITDA was better than expected. It added, the strong show in the mobile phones segment helped offset the revenue miss, and the EMS business continued its strong momentum, growing 194 per cent as existing customers increased orders and new customer volumes ramped up.
CLSA, on the other hand, said Dixon's Q4 performance was "in-line". The brokerage also added the stock to its 'High Conviction Outperform' list.
While margins might moderate in FY27 as benefits from the production-linked incentive (PLI) scheme reduce, CLSA believes gains from backward integration, better efficiency, and larger scale will help margins recover over the medium term. It also sees new areas like IT hardware (laptops) and industrial electronics manufacturing starting to make a meaningful impact from FY27.
According to Nomura, Dixon's Q4 results beat their expectations, with the mobile segment ramping up well across both domestic and export markets. The increasing value addition is expected to support further margin expansion.
The brokerage firm also highlighted that Dixon's wide client base, recent acquisitions, and strategic partnerships are helping the company strengthen its competitive edge.