Dixon Technologies shares fall 35% from 52-week high: Mixed views on outlook, price targets

Dixon Technologies share price target: Shares of Dixon Technologies have fallen 35% from their 52-week high in nine months, leaving investors worried over the prospects of their investment. Dixon stock has been under pressure due to rising global RAM and component costs reducing budget device volumes. 

Rising global prices of DRAM and NAND memory chips are significantly increasing smartphone manufacturing costs. Since India's smartphone market is dominated by budget and mid-range devices, manufacturers face limited flexibility to absorb these higher input costs. As a result, affordability comes under pressure, dampening consumer demand and leading to a decline in smartphone shipment volumes.

Meanwhile, Dixon Technologies stock hit a 52 week low of Rs 9605 on March 30 this year.  Of late, the stock has surged 17% in three months. However, the stock is still down 35% from its 52-week high. 

Dixon Technologies stock has slipped 14% in a year. 

In the current session, Dixon Technologies stock was flat at Rs 12,155. Market cap of the firm stood at Rs 74,249 crore. 

Turnover rose to Rs 1.63 crore as 1342 shares of the firm changed hands on BSE. 

Shares of Dixon Technologies are trading higher than the 20 day, 30 day, 50 day, 100 day, 150 day, 200 day but lower than the 5 day and 10 day moving averages, signalling the trend is mixed for the market leader in its segment. 

The relative strength index (RSI) of Dixon Technologies stands at 55.5, signaling it's trading neither in the oversold nor in the overbought territory.

JM Financial has assigned a buy call on the Dixon stock with a price target of Rs 14,200 against the previous target of Rs 11,200. This amounts to a 27% upside from the previous close. 

"We up our FY27-29E EPS by 1-10% factoring in higher ASPs and non-smartphone ramp-ups, rolling over valuation to Jun’28E (from Mar’28E), and raising target multiple to 50x (from 45x), given improved visibility from Vivo JV. Hence, we upgrade Dixon to BUY (from ADD) with a TP of INR 14,200 (from INR 11,200)," the brokerage said. 

On the other hand, Brokerage firm CLSA downgraded shares of Dixon Technologies but maintained its price target, which is among the lowest on the street.

CLSA downgraded Dixon Technologies to "underperform" from its earlier rating of "hold" but maintained its price target of Rs 10,400. 

CLSA believes the sharp run-up in Dixon Technologies shares, driven by optimism around potential approvals and growth prospects, has stretched valuations beyond reasonable levels. The stock has delivered strong gains since late March, prompting the brokerage to caution that much of the positive news may already be reflected in the current price.

CLSA expects Dixon's core smartphone manufacturing business to face headwinds in FY27, primarily due to rising global memory chip costs. Higher prices of DRAM and NAND components are likely to increase smartphone production costs, which could weigh on demand in India's price-sensitive handset market and impact shipment volumes.

The brokerage also highlighted execution risks related to the company's backward integration initiatives. Any delays in these projects could affect earnings growth and lead to downside risks for current estimates. In addition, with Dixon's domestic smartphone market share showing signs of stabilisation, CLSA expects the pace of growth to moderate over the coming years.

Given the stock's rich valuation multiple based on projected FY28 earnings, CLSA believes the current risk-reward equation is unattractive and sees limited room for further upside from current levels.