Dixon Tech shares soar 5% after Q3. Should you buy, sell, or hold?

Shares of electronics contract manufacturer Dixon Technologies gained as much as 5% to their day’s high of Rs 10,846 on BSE on Friday after its net profit rose 67% YoY to Rs 287 crore, largely supported by a one-time gain of Rs 131 crore from the fair value adjustment related to Dixon’s stake sale in Aditya Infotech Limited for its lighting business undertaking.

Dixon reported Rs 9,750 crore in revenues from its mobile and other EMS division, generating an operating profit of Rs 350 crore. The slump in revenues came as a result of a 7% year-on-year fall in smartphone shipments in the post-festive quarter, driven by high inventory and rising memory costs.

Should you buy, sell or hold Dixon Tech shares?

Goldman Sachs has maintained a Sell rating on Dixon Technologies while marginally raising its target price to Rs 10,000 from Rs 9,950, implying a downside of 3.2% from the last close. The brokerage said the company’s Q3 performance fell short of expectations as mobile and EMS volumes remained largely flat.

It pointed out that elevated DRAM prices affected mobile volumes, while consumer electronics demand stayed subdued due to inventory corrections and BEE-related changes. Goldman Sachs expects Dixon’s growth momentum to moderate in 2026 and believes earnings downgrades may continue. While value addition efforts are seen as a positive, the brokerage remains cautious about long-term customer stickiness.

Motilal Oswal has reiterated its Buy rating on Dixon Technologies with a revised target price of Rs 16,700, suggesting a 62% upside from current levels. The brokerage noted that the stock is trading at 54.6x and 35.4x P/E based on FY27 and FY28 estimated earnings, respectively.

It has revised its earnings estimates downward by 23% and 9% for FY27 and FY28 to reflect weaker smartphone demand and expectations of lower margins in FY27. The firm now projects a CAGR of 31%, 35% and 36% in revenue, EBITDA and PAT, respectively, over FY25 to FY28.

EBITDA margins are estimated at 3.9% for FY26 and 3.5% for FY27, with a recovery to 4.3% by FY28 as backward integration benefits begin to materialise post-PLI investments. Motilal Oswal added that the stock’s 46% correction from its peak has already priced in much of the uncertainty, reinforcing its positive stance.

JM Financial has maintained its Add rating on Dixon Technologies with a revised target price of Rs 11,000, lowered from Rs 13,800 earlier. The brokerage said Dixon’s Q3 performance was largely in line with expectations but flagged concerns including global memory shortages, delays in regulatory approvals and potential margin pressure after the PLI scheme ends in 2026.

Continued memory supply constraints, the duration of which remains uncertain, are expected to weigh on volumes, leading to a reduction in FY26E smartphone volume guidance from around 40 million units to approximately 34 million units, while visibility on FY27E volumes remains limited.

JM Financial added that management remains optimistic about securing PN3 approvals for Vivo, though timelines remain unclear. It also cautioned that margins may face pressure once PLI benefits taper off, as the full impact of backward integration is expected to be realised only by FY28E.

At around 11:20 am, shares of Dixon Technologies were trading at Rs 10,647, up 3% from the previous close.

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