Dixon Tech share price target: Nomura sees 50% upside after HKC display JV approval

Dixon Technologies Ltd shares may potentially deliver 50 per cent upside, Nomura said on Monday, as it retained its 'Buy' rating on the stock after the company received government approval for its previously announced joint venture with HKC Overseas Limited to manufacture display modules in India. Nomura said HKC is a strong partner in display, which is already catering to most of Dixon's mobile customers globally and also a leading player in IT hardware and TV displays. Dixon's display plant construction is already on track with trials likely from Q2FY27 and ramp-up in H2FY27, the foreign brokerage said.

"This along with camera modules, which is already in ramp up stage, will increase value addition by Dixon and remains a longer term structural margin tailwind, in our view. Maintain Buy," Nomura said.

On Tuesday, the stock rose 7.10 per cent to hit high of Rs 10,501 on BSE. Nomura suggested a target price of Rs 14,678 on Dixon Technologies over Monday's closing price, based on about 45 times its FY28 estimated earnings per share. It said the stock currently traded at roughly 30 times FY28 estimated earnings.

Nomura noted that the JV, first announced in June 2024, would manufacture liquid crystal display modules and thin-film transistor liquid crystal display modules through a new entity called Dixon Display Technologies Private Limited. The venture would develop, produce and distribute LCD and TFT-LCD modules along with other display technologies.

These products would cater to multiple sectors including smartphones, laptops, automotive displays, televisions, computer monitors and industrial applications. According to the brokerage, the partnership aimed to strengthen India’s domestic display ecosystem, reduce dependence on imports and enhance manufacturing capacity across the electronics and automotive segments.

Nomura said the joint venture’s establishment and HKC’s capital investment remained subject to fulfilment of the remaining conditions under the share subscription agreement, apart from the Press Note 3 approval already obtained.

The brokerage said the approval provides meaningful clarity on the ramp-up of the JV. Nomura said Dixon’s display plant construction was progressing and trials were likely to begin in the second quarter of FY27, with ramp-up expected in the second half of FY27. It noted that Dixon planned to invest about Rs 1,200 crore in the project over time. Phase 1 capacity would include around 24 million smartphone displays and 2 million laptop displays, with capacity expected to rise to about 55 million units later.

The brokerage also said the company planned to add automotive display customers, which it had not yet factored into its estimates.

Nomura noted that display module assembly accounted for roughly 10 per cent of the bill of materials and typically carried healthy double-digit margins. It said this could add about 50 basis points to Dixon’s overall margins by FY28 and up to 100 basis points later with full ramp-up.