Shares of Dixon Technologies (India) Ltd experienced a significant drop of nearly 12% on January 21, 2025, following disappointing financial results for the third quarter. The decline was triggered by higher-than-expected depreciation and finance costs, which led to a 5-7% shortfall in profitability compared to analyst estimates.
Financial Performance Overview
In the recently concluded quarter, Dixon reported a staggering 47.5% year-on-year decrease in net profit, falling to ₹216 crore from ₹411.7 crore in the same period last year. Revenue also took a hit, declining over 9% to ₹10,453.7 crore. This downturn raised concerns among investors, especially as the stock has underperformed the broader market, with a year-to-date decline of 12% compared to a 1.5% drop in the Nifty 50 index.
Analysts’ Perspectives
Despite the recent slump, some analysts remain optimistic about Dixon’s future prospects. Kotak Institutional Equities highlighted that the company’s ability to execute its plans for a display fabrication unit, in partnership with HKC, will be crucial for its growth trajectory. The total investment for this venture is projected at $3 billion.
InCred Equities has adjusted its revenue estimates upward by 9-11% for the next few fiscal years, citing growth in mobile phone and IT hardware segments. They maintain an “ADD” rating on the stock with a revised target price of ₹20,200.
Conversely, Jefferies has adopted a more cautious stance, assigning an “Underperform” rating and setting a lower target price of ₹12,600 due to concerns over declining consumer electronics sales and high valuation metrics.
Future Outlook
Looking ahead, Dixon Technologies is focusing on backward integration and aims to begin display manufacturing by early FY26. The company is also exploring opportunities in display fabrication and is awaiting government incentives that could support these initiatives.
While the recent financial results have raised red flags, analysts suggest that investors should consider the long-term potential of Dixon Technologies as it navigates through these challenges. With strategic partnerships and a commitment to innovation, Dixon may still hold promise for those willing to weather the current volatility in its stock price.
