Dixon Technologies shares fall ahead of Q1 results; key things to watch

Shares of Dixon Technologies were trading in the red in Tuesday's session, ahead of the company's June quarter results. This is even as Dixon Tech is expected to deliver strong results, led by expanding exports and the scale-up of non-mobile segments.The growth would be driven by ramping up mobile phone volumes from the new customers that it had acquired in the preceding quarters, analysts said adding that the refrigerator segment will also aid revenue growth. Margin for Dixon Tech is expected to stay stable on year-on-year (YoY) basis.

On Tuesday, Dixon Technologies shares were down 1.13 per cent at Rs 16,095.

YES Securities sees Dixon Tech to report 59.9 per cent YoY rise in profit at Rs 223.40 crore on 74 per cent surge in sales at Rs 11,446 crore. Nuvama sees Dixon Tech's profit rising 42 per cent YoY to Rs 189.20 crore. Sales are seen rising 80 per cent YoY to Rs 11,872 crore. Ebitda margin is seen at 3.8 per cent.

"Expect robust growth in mobile & EMS (+102 per cent YoY; both Mobile and EMS subsegments to see 100% growth YoY) while consumer appliances to see headwinds (weak TV volumes and higher competitive intensity). Expect stable margins in the mobile segment (3.8 per cent) while margins to improve in consumer electronics on cost optimisation," Nuvama said.

Kotak Institutional Equities said said Dixon Tech should continue to grow at a brisk pace (up 86 per cent YoY), with mobile phone volumes likely reaching 95 lakh, led by an increase in domestic sales and Motorola export volumes. Profitability will likely see some pressure (down 7 basis points YoY) this quarter, as the share of the low-margin mobile and EMS sectors increases.

Dixon Tech recently announced the acquisition of Q Tech India. Analysts said its JV with Chongqing Yuhai Precision Manufacturing is expected to bode well with its tie up with HKC for the manufacturing of display sub-assemblies and further fuel its backward integration initiatives. With the mobile PLI coming to an end, and competitive intensity expected to increase, it is crucial for Dixon Tech to strengthen its customer relations through stronger capabilities, and these partnerships, besides being margin accretive, do just that, JM Finacial said in a recent note.