Dixon Technologies shares gain 3% as firm to buy majority stake in Ismartu

Shares of Dixon Technologies Ltd rose over 3% today after the firm said it has inked a share purchase agreement with Ismartu In Pte. Ltd, to buy up to 56% equity stake in the latter in two tranches. Dixon Technologies shares gained 3.16% to Rs 7877.95 against the previous close of Rs 7636.45 on BSE.

The stock of the electronic goods contract manufacturer opened higher at Rs 7805. The market cap of the consumer durables firm rose to Rs 46,012 crore. Total 0.28 lakh shares of the firm changed hands over the counter amounting to a turnover of Rs 21.55 crore on BSE.

In the first tranche, Dixon would buy 1.38 crore equity shares of Ismartu India Pvt. Ltd. or 50.1% of the total equity. Of this, 1.34 crore shares will be bought Ismartu In Pte Ltd., 51,832 equity shares will be acquired from Transsion Technology Ltd. and 3.46 lakh equity shares will be acquired from 5A Advisors LLP.

Dixon will spend Rs 238.36 crore to buy these shares in the first tranche, subject to pre-closing and post-closing adjustments.

The second tranche will see Dixon acquire a minimum of 4.43 lakh equity shares of face value of Rs 10 each of the Target company, constituting to 1.6% of the total issued, subscribed and paid-up share capital of Ismartu and a maximum of up to 16.33 lakh equity shares or an aggregate of up to 5.9% of the total equity from Ismartu Singapore, subject to Ismartu achieving a profit after tax (PAT) of Rs 200 crore in financial year 2026.

This second tranche will be acquired by financial year 2027 for an aggregate consideration which will be determined basis a valuation of 20 times of profit after tax of the target company for financial year 2026.

In terms of technicals, the relative strength index (RSI) of Dixon Technologies stands at 64.4, signaling it's trading neither in the overbought nor in the oversold territory. Shares of Dixon Technologies are trading higher than the 10 day, 20 day, 30 day, 50 day, 100 day and 200 day moving averages.

Noida-based Ismartu is in the business of of manufacturing and assembly, sale, distribution, import and export of mobile phones, tablets, electronic devices and other components of mobile and other electronic devices.

The acquisition is in-line with Dixon's strategy to grow its business in the segment and to achieve strategic goals and expansion of business.

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.