According to CNBC TV18, Investec has reiterated its 'Buy' rating on Dixon Technologies and raised its price target to ₹16,200 from ₹14,500, implying a potential upside of nearly 30% from Friday's closing price of ₹12,455.10. The brokerage has raised its FY27-FY28 earnings per share (EPS) estimates by 6-8%, factoring in the company's previously guided mobile handset volumes, which are expected to remain largely flat in FY27 excluding Vivo. Investec has also increased its revenue estimates for Dixon's telecom and IT hardware businesses. The revised target comes alongside JM Financial's earlier 'buy' rating with a ₹14,200 target price, also implying significant upside potential for the electronics manufacturing services giant.
According to Investec's latest analysis, mobile phone demand has begun stabilising, with consumers showing greater acceptance of higher prices. The brokerage noted that 'Higher ASPs compensate for volume loss,' with the Average Selling Price (ASP) of smartphones increasing from around ₹10,000 to nearly ₹12,500-13,000. Investec believes that Chinese electronics manufacturing services (EMS) companies are gradually losing market share to Indian peers, providing additional tailwinds for Dixon's growth prospects. Despite the expiry of the Production Linked Incentive (PLI) scheme, the brokerage expects Dixon to report broadly flat year-on-year EBITDA during the first half of FY27, followed by a strong acceleration in earnings growth in the second half.
The proposed joint venture with Vivo represents a major growth catalyst, with JM Financial estimating that Vivo sells around 35-37 million smartphones annually in India, with nearly two-thirds expected to be manufactured through this partnership. This creates an opportunity of nearly 24 million additional smartphones for Dixon over time, with the full impact likely to be visible from FY28. The brokerage estimates that the partnership could begin contributing towards the end of the second quarter of FY27 or during the second half of the financial year. The Dixon-Vivo JV is inching closer to final government approval, having been cleared by the inter-ministerial panel earlier this month. Investec notes that management expects approval for the Vivo joint venture in the near term, which could add more than 20 million units of annual production capacity.
Beyond domestic smartphone manufacturing, Dixon is capitalizing on export opportunities through strategic facility expansions. The company is constructing a dedicated facility for Transsion Group exports, which will initially manufacture feature phones before expanding into smartphones. Investec expects exports to contribute an additional 4-5 million units during FY27, with a much stronger ramp-up expected from FY28 as the proposed Production Linked Incentive (PLI) 2 scheme supports exports and localisation. The brokerage noted that the company is emerging as another important growth engine for Dixon, with management expecting exports to expand significantly in the coming years. Investec also sees further upside from a potential recovery in mobile exports, particularly if the proposed PLI 2 scheme is implemented, along with the company's planned entry into the speciality EMS segment through acquisitions.
The company's ongoing investments in components manufacturing are expected to strengthen profitability over the medium term. Investec highlighted that Dixon's camera module joint venture with Q Tech is expanding annual capacity from 80 million units to 180 million units, with management expecting margins in the business to improve from around 6% to 8-9% as benefits from the Electronics Component Manufacturing Scheme begin to accrue. The display module joint venture with HKC involves planned capital expenditure of ₹1,100 crore and will have annual capacity to manufacture 24 million mobile display modules, with 60-65% expected to be consumed internally alongside 2.4 million automotive display modules. Investec expects the venture to generate annual EBITDA of more than ₹1,200 crore from FY29 onwards.
Beyond smartphones, Dixon continues to scale up its presence in IT hardware and telecom equipment manufacturing. The company now partners with four leading IT hardware brands that together account for more than 60% of the domestic market, with management targeting around 20% market share in India's $8.5 billion IT hardware opportunity over the next few years. In telecom, Dixon is expanding its relationship with Bharti Airtel as broadband penetration increases, while the recently announced joint venture with Gemtek is expected to strengthen the company's networking product portfolio and provide an entry into the server segment. The Inventec joint venture facility is expected to become operational within about six months, while localisation initiatives continue to progress.
According to Bloomberg data, 22 of the 32 analysts tracking Dixon Technologies have a 'Buy' rating on the stock, while three recommend 'Hold' and seven have a 'Sell' call. Dixon Technologies shares ended Friday's session 0.64% higher at ₹12,455.10 and have gained about 3% so far this year. The stock has been in focus following the latest upgrade announcements, with the revised target of ₹16,200 implying significant upside potential from current levels. Investec believes Dixon Technologies is well positioned for its next phase of growth, supported by resilient mobile volumes, the proposed Vivo joint venture, rising exports, deeper backward integration and expanding opportunities in IT hardware and specialty electronics manufacturing.
