Dixon Technologies shares are in correction mode, can they deliver in long term?

Shares of Dixon Technologies Ltd have seen correction in the short-term amid the ongoing market volatility. The multibagger stock has lost 28.63% in three months and fallen 6.57% in two weeks. On the other hand, the stock has gained 354% in two years and risen 1819% in five years.

The stock looks weak in terms of technicals. Shares of Dixon Technologies are trading lower than the 5 day, 20 day, 30 day, 50 day, 100 day, 150 day and 200 day moving averages.

The relative strength index (RSI) of Dixon Technologies stands at 42.7, signaling it's trading in the neither in the overbought nor in the oversold territory.

Kotak Institutional Equities has raised its price target on the stock to Rs 15,000.

The brokerage expects Dixon Tech expected to be the key beneficiary of the Rs 230 bn component PLI scheme. Kotak said the company may ramp up its backward integration into display assembly, camera module assembly and mechanical components. Kotak is of the view that the recently announced deal with Signify will help Dixon improve its lighting segment growth.

"Lastly, we expect Dixon to report a steady 4QFY25 (132 per cent YoY growth/3 per cent QoQ), driven by continued growth in mobile segments. We upgrade Dixon to ADD from REDUCE as we incorporate the impact of the Signify deal and marginally raise FV to Rs 15,000 (Rs 14,770 earlier)," Kotak said.

HSBC has assigned a buy call on Dixon Technologies with a target of Rs 20,000 per share. The firm posted a strong set of results in Q3 on the back of a sharp ramp-up of the mobile business. There are plans of a massive investment in a display Fab. The brokerage expects strong earnings growth and upgrades to continue for the electronic firm's stock. 

Global brokerage Jefferies has maintained an underperform rating on the stock with a target price of Rs 12,600 post Q3 earnings. 

Earnings beat expectations but risk-reward remains stretched at FY26 P/E of 106x, said the brokerage. 

Dixon Tech is a non-branded B2B EMS player but trades higher than branded B2C companies. Its expects sales/PAT CAGR of 45%/49% over FY24- 27. The firm's operating margin is estimated to remain stable at 4%, said Jefferies.  

Motilal Oswal said PAT stood lower than its estimates on higher depreciation, interest, and minority interest. 

However, Motilal Oswal assigned a buy call to the stock with a price target of Rs 20,500. 

Nuvama maintained its hold call on the stock but raised its price target. 

"We are revising FY25E/26E/27E PAT by -3%/5%/10% to reflect i) weaker performance in TV; ii) Vivo JV; and iii) full Ismartu consolidation (Q3 is the first full quarter). We roll forward valuation to Mar’26, yielding a TP of Rs 18,790 (earlier Rs 16400), based on 65x FY27E EPS; maintain ‘HOLD’ on fair valuation," said Nuvama.

In the current session, the stock slipped 3.91% to a low of Rs 14,540 on BSE. Turnover stood at Rs 28.60 crore as 0.19 lakh shares of the firm changed hands on BSE. Market cap of the firm fell to Rs 88,304 crore. 

Dixon Technologies reported a strong set of earnings for the quarter ended December 2024. Net profit rose 124% year-on-year to Rs 217 crore. Profit in Q3 of last fiscal stood at Rs 97 crore. 

Revenue rose 117% to Rs 10,461 crore in the December 2024 quarter. Dixon Technologies EBITDA more than doubled to Rs 398 crore in the October-December quarter.

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.