Dixon Technologies shares slump 14% after Q3 results. What should investors do?

Dixon Technologies shares nosedived 13.58% to Rs 15,175.20 on the BSE on Tuesday, January 21, even after the firm reported a 124% jump in its December quarter consolidated net profit at Rs 217 crore versus Rs 97 crore reported in the year ago period. However, a higher-than-expected depreciation and finance cost resulted in a 5-7 percent shortfall in Q3 profitability.

The revenue from operations in Q3FY25 stood at Rs 10,461 crore which was 117% higher from Rs 4,821 crore reported by the company in the corresponding quarter of the previous financial year.

Dixon Tech reported a 113% increase in its Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) at Rs 398 crore as against Rs 187 crore reported in Q3FY24 crore. Meanwhile, the EBITDA margin was down 10 bps at 3.8% in the October-December quarter versus 3.9% reported in Q3FY24.


PAT margin was up by 10 bps at 2.1% in the reported quarter versus 2% in the year ago period.

Should you buy, sell, or hold Dixon Tech's stock? Here's what analysts say:

Jefferies

Jefferies maintained its 'Underperform' rating on Dixon Technologies with a target price of Rs 12,600, citing an earnings beat but cautioning that the risk-reward remains stretched, especially given the company's high FY26 P/E of 106x.

Despite being a non-branded B2B EMS player, Dixon trades at a premium compared to branded B2C companies. The firm estimates a strong sales/PAT CAGR of 45%/49% over FY24-FY26, with operating margins expected to remain stable at 4%. Jefferies' target P/E of 53x aligns with historical averages for the company.

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Nuvama

Nuvama maintained its 'Hold' rating on Dixon Technologies with a target price of Rs 18,790, following a 117% YoY revenue growth, mainly driven by the Mobile and EMS segments.

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The firm has revised its FY25-27 estimates downward by 3%-7% due to factors such as Ismartu consolidation, the Vivo JV, and muted demand in consumer appliances. Additionally, Dixon plans to enter display fab manufacturing, capitalizing on available incentives.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)