Dixon Technologies Q4 results: Share price rallies over 8% after decent Q4 show
Dixon Technologies posted a net profit of ₹80.6 crore in Q4FY23, a rise of 27.7% as compared to ₹63.1 crore in the corresponding quarter last year.
Dixon Technologies share price spiked more than 8% Wednesday after the company reported decent growth in its March quarter net profit. The stock price rose as much as 7.97% to ₹3,536.70 apiece on the BSE.
Dixon Technologies posted a net profit of ₹80.6 crore in Q4FY23, a rise of 27.7% as compared to ₹63.1 crore in the corresponding quarter last year. The company's revenue from operations rose 3.8% to ₹3,065.5 crore from ₹2,953 crore in the year-ago period.
At the operating level, earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 32.3% to ₹156.3 crore from ₹118 crore, while EBITDA margin improved by 110 bps to 5.2% from 4.1%, YoY.
The company's board declared a final dividend of ₹3 per equity share of the face value of ₹2 each, for fiscal 2022-23.
Read here: Dixon Tech Q4 Results: Net profit rises 27% to ₹80 crore, dividend declared
Brokerage firm ICICI Securities believes Dixon Technologies posted healthy improvement in margins but it needs higher margin of safety on valuations to be constructive.
While the company has taken the right steps to improve share of ODM, initiated cost-saving measures, the brokerage firm believes weaker demand for white goods and durables is likely to impact revenue growth in near term.
“While there is strong demand for hearables, wearables and mobiles, there is still muted demand in white goods. While the company is confident of adding new customers in Mobile and Home appliances segments, we believe the ramp up will be gradual in FY24-25," ICICI Securities said.
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The brokerage raised FY24-25 earnings to factor in higher share of ODM and improvement in margins. At current valuations of 52.8x FY24E, it believes the risk: reward is not favorable to the investors and hence, ICICI Securities maintained ‘Reduce’ rating on the stock with a DCF-based TP of ₹3,000 per share.
It expects Dixon Technologies to report revenue and PAT CAGRs of 31.7% and 42.1%, respectively, over FY23-FY25E.
Emkay Global Financial Services believes that slowdown in some key segments will hamper the overall growth of brands, which will see additional impact from Dixon Technologies being a B2B supplier.
“Robust margin performance in Q4 is likely to sustain, as Dixon’s share in ODM manufacturing continues to grow. Building-in the slight cuts in revenue, and offset by the existing margin trajectory, FY24E-25E EPS is largely intact (+2.6% in FY24E, while staying flat in FY25E)," Emkay Global said.
The brokerage maintains ‘Hold’ rating on the stock, with a target price of ₹3,403 per share.
The shares of Dixon Technologies have risen by just 1.5% in the last one year, but have rallied more than 25% in the last three months.
At 11:15 am, the shares of Dixon Technologies were trading 7.97% higher at ₹3,536.70 apiece on the BSE.
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