Dixon Tech shares: Global memory price hikes to hit volumes; stock gets 22% target cut

Nomura in a fresh note on Dixon Technologies Ltd (Dixon Tech) said a sharp rise in global memory prices could weigh on mobile volumes for Dixon Tech in the near term, potentially affecting both volumes and the stock, even as the brokerage remained constructive on the medium-term growth outlook.

Nomura maintained its 'Buy' rating on Dixon Tech, while cutting its target price by 22 per cent to Rs 16,598 from Rs 21,152 earlier. The brokerage lowered its target valuation multiple to 45 times FY28 EPS from 55 times earlier, placing it at the lower end of Dixon’s historical trading band of 40 times to 60 times. Nomura said this adjustment factored in the risks from weak mobile demand and a potential slowdown in earnings growth to about 25 per cent after FY28. It added that Dixon Tech was still expected to deliver an EPS CAGR of about 54 per cent over FY26 to FY28, supported by the ramp-up of the Vivo joint venture and the display joint venture, with pending government approvals remaining a key catalyst.

Nomura said global memory prices for DRAM and storage rose about 30 per cent to 40 per cent quarter-on-quarter in Q3FY26, driven by strong demand from AI servers, and were likely to rise further by 20 per cent to 30 per cent in the first half of calendar year 2026. The brokerage noted that this had led to a supply shortage for the mobile handset segment, where contract prices remained lower, and said the demand supply mismatch was likely to take time to normalise, potentially only by the end of FY27.

Based on its industry survey, Nomura said mobile handset companies in India, excluding Apple, had already raised prices by about Rs 1,000 to Rs 2,000 by December 2025, with entry-level devices seeing hikes of around Rs 2,000. It added that further price increases in the first half of calendar year 2026 could not be ruled out, depending on the trajectory of memory prices. Such price hikes were likely to impact overall mobile industry demand, which stood at around 155 million units in calendar year 2024, in Nomura’s view.

For Dixon, Nomura highlighted that customers such as Transsion and Xiaomi, which together accounted for about 40 per cent of the company’s mobile volumes, catered largely to the entry-level segment. The brokerage said volumes in this segment were likely to be impacted in the near term across both domestic and export markets, leading it to expect a weak third quarter of FY26.

Nomura said growth was likely to recover from FY27, supported by the ramp-up of the Vivo joint venture, which was awaiting government approval, and the addition of new customers with an annual volume potential of about 60 lakh units. Over the medium term, the brokerage maintained its view that Dixon would continue to gain share in the mobile manufacturing landscape, with its share expected to rise to around 35 per cent by FY28 from about 20 per cent in FY26.

Reflecting the near-term demand pressure, Nomura cut its mobile volume estimates to 39 million units for FY26, excluding Vivo volumes of 3.6 crore units, 5.7 crore units for FY27 and 6.6 crore units for FY28, compared with 4.7 crore units, 6.4 crore units and 7.3 crore units earlier. As a result, it lowered revenue estimates by 12 per cent for FY26, 2 per cent for FY27 and 1 per cent for FY28, with lower volumes partly offset by higher average selling prices. Nomura revised its Ebitda margin estimates to 3.8 per cent for FY26, 4 per cent for FY27 and 4.7 per cent for FY28, leading to EPS cuts of 17 per cent, 16 per cent and 7 per cent, respectively.