Nuvama Institutional Equities has revised its financial outlook and target price for Dixon Technologies (India) Ltd. The brokerage increased its earnings per share (EPS) estimate for FY28 by 9 percent, attributing this to a projected faster scale-up in components manufacturing. However, Nuvama simultaneously reduced its FY27 earnings estimate by 7 percent, citing a likely delay in the consolidation of the joint venture with Vivo.
Revised Projections Amidst Market Weakness
Nuvama's analysis follows recent interactions with Dixon Technologies' management. The brokerage noted a continued weakness in the smartphone market, with the September quarter experiencing an estimated 15-20 percent year-over-year decline. Despite this challenging market, Dixon Tech is anticipated to gain market share.
For Q2FY27, Dixon's smartphone volumes are projected to be around 94-95 lakh units, indicating a 10-12 percent year-over-year fall but still implying market share expansion. Smartphone realizations are expected to rise by 10-15 percent quarter-over-quarter, with stable margins per unit, contributing to modest EBITDA growth.
Delayed Vivo JV and Component Growth
The commercial launch of the Dixon-Vivo joint venture is now expected in Q3FY27, a delay from the previously anticipated October 2026 timeline. This delay is the primary reason for the cut in FY27 EPS estimates.
Conversely, the faster scale-up in components manufacturing is a key driver for the improved FY28 outlook. Dixon has reiterated its FY27 guidance of 3.3 crore units for smartphones.
The company also highlighted strong traction in its telecom and IT hardware segments. FY27 revenue for telecom is projected at Rs 6,500–7,000 crore (a 40 percent year-over-year increase), while IT hardware revenue is expected to exceed Rs 6,000 crore (a substantial 275 percent year-over-year growth).
Nuvama's Rating and Long-Term Goals
Nuvama Institutional Equities maintained its 'Hold' rating on Dixon Technologies, raising its September 2027 target price to Rs 14,800 from Rs 13,700. This revised target is based on 50 times the September 2028 EPS. Currently, Dixon trades at 54 times its FY28E EPS.
Looking ahead, Dixon aims for 1.5-2 crore export units and total annual smartphone volumes of 7-7.5 crore units. The company targets mobile phone revenue of Rs 1.05-1.1 lakh crore, with margins expected to improve through backward integration and government incentives under the Modified Programme for Semiconductors and Display Fab Ecosystem (MPMS).