Dixon Technologies shares: JM Financial cuts target price by 20%; stock up 3%

Shares of Dixon Technologies (India) Ltd continued their uptrend for the third consecutive session on Friday. The stock rose nearly 4.9 per cent to hit the day’s high of Rs 10,846.35 on the BSE, up from its previous close of Rs 10,338.75. 

At 11:21 am, the Dixon counter was trading 3 per cent higher at Rs 10,649.05.

Brokerage JM Financial, in its note, highlighted that while Dixon’s third-quarter performance was largely in line with estimates, the future looks cloudy due to emerging macroeconomic headwinds. JM Financial pointed to macro concerns over memory shortage globally as a primary reason for the tempered outlook.

JM Financial maintained its ‘Add’ rating on Dixon Technologies but slashed its 12-month target price by roughly 20 per cent to Rs 11,000, down from Rs 13,800 earlier.

According to JM Financial, global memory chip manufacturers such as Samsung and SK Hynix are reallocating capacity to meet the growing demand for AI infrastructure, resulting in a supply squeeze for smartphone manufacturers. 

“The issue around memory shortage, easing of which is unknown to most, is likely to have a bearing on volumes, driving a cut in FY26E guidance from ~40mn smartphones to ~34mn, and high unpredictability over FY27E volumes,” brokerage said.

JM Financial flagged the delay in receipt of regulatory approvals for the company's joint venture with Vivo as a limiting factor. “Management remained confident of receiving PN3 approvals for Vivo, but timelines remain uncertain. Lastly, on margin, some pressure upon completion of the PLI cannot be ruled out as full-blown benefits of backward integration will be seen only in FY28E,” JM Financial said.

The brokerage has cut its earnings per share (EPS) estimates by 6-16 per cent across FY26-28E. Now values Dixon at 45x Dec’27E EPS, vs. 50x earlier, citing the uncertainties over growth.