Dixon Technologies shares stare at deeper correction, fall for second day on Q4 earnings

Shares of Dixon Technologies slipped for the second straight session today after the EMS firm reported its Q4 earnings. The stock has lost 10% in two sessions and analysts opine that it could see more correction. 

Hardik Matalia, Derivative Analyst, Choice Broking said, "From a technical perspective, the stock is trading above its 50-day and 200-day EMAs, suggesting that the long-term trend remains intact. However, it has slipped below its 20-day EMA, a short-term bearish signal that may indicate sideways to downward price action in the near term. A sustained breakout above the Rs 17,000 level, backed by strong volumes and follow-through price action, would be essential to confirm a resumption of the bullish trend and could open the door for fresh upside. Until then, the current setup hints at potential consolidation or further short-term weakness. A break below Rs 15,250 would be a strong bearish signal, potentially triggering fresh selling pressure and a deeper correction."

Dixon Technologies stock slipped to an intraday low of Rs 15,045.60 in the current session on BSE. Market cap of the firm fell to Rs 92,016 crore. Turnover rose to Rs 50.42 crore as 0.33 lakh shares of the firm changed hands on BSE. 

The relative strength index (RSI) of Dixon Technologies stands at 48.1, signaling it's trading in the neither in the overbought nor in the oversold territory.

Shares of Dixon Technologies are trading lower than the 5 day, 10 day, 20 day, 30 day but higher than the 50 day, 100 day, 150 day and 200 day moving averages.

Shitij Gandhi, Senior Research Analyst (Technicals), SMC Global Securities said, "Technically, the stock has been facing strong resistance around the 16,900 level, failing to sustain a breakout over the past few sessions. The daily chart indicates the formation of a double-top pattern, triggering a wave of profit booking thereafter.  Despite the recent pullback, the stock continues to hold comfortably above its 200-day exponential moving average (EMA), keeping the medium-term trend in bullish territory. In the near term, the stock is expected to trade within a broad range of 14,000 to 16,500. A decisive breakout on either side of this range will likely determine the next directional move for the stock."

Ravi Singh, Senior Vice President of Retail Research at Religare Broking said, "On the technical charts, Dixon Technologies continues to exhibit bullish momentum, with the stock trading firmly within a consolidation range of 13,500–17,500 on the weekly chart. The RSI stands at 54, while the ATR is approximately 1,400. Considering the price action, the 14,200–14,500 zone appears to be a significant demand area for initiating fresh long positions, with an upside potential toward the 17,500–18,500 range."

Vinod Jhaveri, Independent Analyst at Pure Technicals said, "Dixon Technologies came out with block buster results but stock price is reacting negatively. If one were to dig deep into the financial statement, the trade receivables have gone up drastically which implies delayed payments which affects the cash flow of the company. Profits have gone up but cash flow looks stressed. This cash flow problem can get into a big problem if the company doesn't address trade receivables soon. Technically the stock is getting support at 10 WEMA at 15400 with multiple resistances around Rs 17000. A weekly closing below 15,400 can open up a bigger downside."  

Commenting on the fundamental aspect of the stock, Arun Agarwal, Vice President- Fundamental Research, Kotak Securities said, “Dixon’s Q4FY25 results came in ahead of expectations at the EBITDA level. We see the component PLI as the next big catalyst for Dixon. The company aims to backward integrate into display modules, camera modules, enclosures and batteries. Pick-up in IT Hardware , exports and closing the Vivo deal is also a key thing to watch out for. Dixon’s earnings is expected to grow by healthy double-digit over the next two years.”

Dixon Technologies reported a 322% year-on-year rise in Q4 profit to reach Rs 401 crore powered by an one-time exceptional gain of Rs 250.4 crore. Revenue also climbed 121% year-on-year to Rs 10,292.5 crore, a significant jump from Rs 4,658 crore in the previous year.

Dixon Technologies (India) is the largest home-grown design-focused and solutions company engaged in contract manufacturing products in the consumer durables, lighting and mobile phones markets in India.