Dixon Technologies: Two quarters of stellar earnings & a tepid market show, can EMS stock deliver returns?

Shares of Dixon Technologies delivered zero returns since the EMS player announced its Q4 earnings on May 20 this year. The stock closed at Rs 16,578 on May 19 a day before the results for the March 2024 quarter earnings were announced. 

In the current session, the multibagger stock closed 2.62% higher at Rs 16,534, nearly 0.34% lower to the close of May 19. 

The negative returns during the two quarters, however do not match the stellar earnings show by the firm in Q1 and Q4 this year. 

The firm reported a 100% year-on-year rise in profit to Rs 280 crore in the June 2025 quarter against Rs 139.70 crore in the corresponding period of the previous fiscal.

Revenue rose 95% year-on-year to Rs 12,838 crore against Rs 6579 crore in the previous year. EBITDA rose 89% to Rs 484 crore. 

In the March quarter, profit after tax (PAT) climbed 322% year-on-year 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 rise from Rs 4,658 crore in the previous year.

The weak stock show between the two quarters has left investors guessing whether earnings of the firm can be relied upon to place bets on the multibagger stock. 

Motilal Oswal said Q1 earnings came in ahead of its estimates, with the mobile segment registering a strong growth of 125% YoY.

It sees a 37% upside in the stock from the previous close of Rs 16,112.30. 

The price target of the  stock is Rs 22,100. 

"The stock is currently trading at 60.8x/44.8x P/E on FY27/28E earnings. We maintain our BUY rating on the stock with a revised DCF-based TP of Rs 22,100 (earlier INR20,500). Reiterate BUY," said Motilal Oswal. 

The brokerage has revised its estimates to factor in higher mobile volumes and increased capex, and expects a CAGR of 33%/36%/45% in revenue/EBITDA/PAT over FY25-FY28.
It believed revenue growth would be mainly driven by mobile segment, while consumer
electronics will remain under pressure for some more time. 

"We expect an EBITDA margin of 3.8%/4.0%/4.2% for FY26/FY27/FY28, led by increased focus on backward integration post PLI. This will result in a PAT CAGR of 45% over FY25- FY28E," added MOFSL. 

Elara Securities has a price target of Rs 17,000 or a 6% upside to 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 expects 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. 

On the other hand, YES Securities has assigned a reduce call to the stock. It has a price target of Rs 15,831 , a down side of 1.7%  from Tuesday's close. The brokerage believes 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," added YES Securities. 

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.