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Home >Markets >Stock Markets >Dixon Technologies in limelight for robust earnings, stock split

Shares of contract manufacturer Dixon Technologies (India) Ltd rose more than 2% in opening trade on the NSE on Wednesday. The stock was on investors' radar screen for its impressive December quarter earnings and stock-spilt announced by the management.

The company reported robust earnings performance in Q3FY21, exceeding estimates on key parameters. It posted record quarterly revenue of 2182 crore much higher than consensus estimate of 1540 crore. Buoyancy in consumer sentiment on the back of festive season and strong order book aided topline growth. Improved sales mix and government restrictions on LED TV imports aided performance of its consumer electronics segment. In the mobiles segment, it added Nokia and Motorola as two new clients.

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Going ahead, the company's management is positive on medium-to-long term growth opportunities in domestic electronic manufacturing. Dixon has also announced further capacity expansions in lighting, semi-automatic washing machines and CCTV camera.

On the flipside, commodity inflation and change in product mix weighed on gross margin, which fell 320 basis points on a year-on-year basis to 9.6%. One basis point in one hundereth of a percentage point. Operating margin at 4.6%, was lower than consensus estimate of 5.1%. The management said that it sees rising input costs as a key risk to margins and would try to curtail the impact via price hikes and effective inventory management.

Meanwhile, the company's board has approved a stock split under which it will issue five shares for each one held. The board approved "the sub-division/ stock split of existing 1 (one) Equity Share of face value of Rs. 10/- each fully paid up into 5 (Five) Equity Shares of 2/- each fully paid up, subject to shareholders' approval," the company said in press release.

Investors should note that the company is being seen as a potential beneficiary of the government's recently announced production linked scheme. That said, it remains to be seen how things pan out on this front and the extent to which they contribute to revenue growth.

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