Dixon Technologies: Low debt, high profit CAGR stock is overbought on charts; buy, sell or hold?

Shares of Dixon Technologies are in a bull run  in the short term, turning the multibagger overbought on charts. The RSI has crossed the 70 mark signalling there are more buyers than sellers in the stock. The RSI stands at 71.1. The stock has rallied 14.36% in a month, adding to the gains of 54% in nearly a year from its 52 week low. 

Dixon Technologies shares slipped to a 52-week low of Rs 10,976.65 on August 5, 2024. 

The multibagger stock has clocked CAGR of 55%  and 39% in net profit in three years and five years, respectively. It had a low debt to equity ratio of 0.08 at the end of last fiscal. 

Dixon stock has gained 307% in two years and rallied 1,000% in five years. Its only this year, the stock has fallen 6.58%, according to BSE data. 

Dolat Capital expects the stock to reach Rs 18,311 in a year post Q1 earnings. It has upgraded the stock to ‘Accumulate’ from 'Reduce' call.  

"We build in a strong Revenue/PAT CAGR of 42%/68% over FY25-27E. We have also revised our FY26E/27E EPS est by -4.9%/+5.9% to Rs 192/298, respectively,"  said Dolat Capital.

"Even post the end of PLI scheme in March 2026, we believe that new customer and product additions, coupled with a focus on backward integration, should continue to aid financials," the brokerage added. 

Mirae Asset Sharekhan has a price target of Rs 18,500 on the Dixon Technologies stock. 

Assigning a buy call to the stock, the brokerage said, "We expect mobile & electronics components ramp up to sustain high growth momentum in FY2026-27. We retain a Buy rating with a PT of Rs. 18,500 factoring in strong revenue/PAT CAGR of 43%/60% over FY25-FY27E. Stock trades at 70x/51x its FY206E/FY2027E earnings, respectively."

Explaining its bullish stance, Sharekhan said, "Onboarding of new major clients in IT hardware segment has set the floor for Dixon’s exponential performance over coming years. Strong order books and strong client base representing the top most players of the industry gives a strong support to lead the growth in mobile and IT Hardware segments. Another leg of support will be provided by ramp-up in the IT and laptop segments."

Elara Securities has a price target of Rs 17,000 on the stock. 

The brokerage has upgraded DIXON to Accumulate from Reduce, with a higher target price of Rs 17,000 (from Rs 14,770) on 65x (from 61x) June FY27E P/E. The key concern as regards mobile PLI will be mitigated through JVs and acquisition in component PLI, supported by strong pick-up in the non-mobile segments and focus on backward integration.

Elara sees an earnings CAGR of 38% through FY25-28E, with industry-best ROE and ROCE of 29% and 38%, respectively through FY26-28E for the EMS firm. 

However, YES Securities has a reduce call on the stock. It has a price target of Rs 15,831. 

The brokerage is of the view that all the positives in terms of strong 45% revenue CAGR and margin expansion have been priced in. 

"We continue to value DIXON at 55x as company return ratios continues to remain healthy. We believe there could be risk to revenue in other products (Ex of mobile) as demand environment continues to be subdued," said YES Securities