Dixon Technologies share price jumps 3% after govt clears Vivo India JV; should you buy the stock?

Dixon Technologies share price jumped 10% in early trade on Friday after the government approved its joint venture with Chinese smartphone maker Vivo Mobile, clearing the way for the companies to set up a smartphone manufacturing company in India. Dixon Technologies shares rallied as much as 3.32% to ₹13,938.40 apiece on the BSE.

Dixon Technologies (India) had entered into a term sheet with Vivo Mobile India Private Limited in 2024 to form a joint venture to undertake original equipment manufacturer (OEM) business of electronic devices including smartphones.

The company on July 9 informed stock exchanges that Vivo Mobile India received approval of Government of India vide letter issued by the Department of Promotion of Industry and Internal Trade, Ministry of Commerce and Industry for incorporation of the JV company and subscription of shares of JV company by Vivo Mobile India.

Dixon Technologies has executed a shareholders’ agreement with Vivo Mobile India to govern the inter-se shareholder relationship, and rights and obligations in relation to the management and operations of the JV Co., upon its incorporation in accordance with the JVA, it said in a regulatory filing on July 9.

The joint venture will be owned 51% by Dixon Technologies and 49% by Vivo Mobile India.

Analysts expect this joint venture to enhance the Dixon Technologies’ manufacturing capabilities and strengthen its market share and positioning in the Android smartphone market in India.

“This also removes the long-pending overhang on the Dixon Technologies stock, as through this JV now, Dixon will get incremental volumes beginning in Q3FY27. Vivo currently has a market share of ~23% in smartphones, and Dixon anticipates that nearly 67% of its volumes will come to the JV. From hereon, the focus will be on demand revival and backward integration,” brokerage firm Motilal Oswal said.

The brokerage firm factors in smartphone volumes of 45 million and 55 million units for FY27 and FY28, including Vivo volumes from Q3FY27 onward and an improved wallet share from other brands.

Chirag Jain, Deputy Head of Research at Emkay Global Financial Services Ltd. noted that Dixon Technologies had given guidance for flattish smartphone volumes in FY27 versus FY26, and this development should trigger earnings upgrades to reflect the Vivo JV volumes.

“We built 6.5 million and 18 million smartphone volumes in FY27E and FY28 from Vivo via the JV versus earlier estimates of nil and 6.9 million (via a TLA), respectively. This drives a 14% and 17% upgrade in FY27E and FY28 EPS,” said Jain.

Beyond the EPS upgrades, Jain views the development as positive on two counts. He believes this further cements Dixon’s dominant position in the domestic smartphone manufacturing market through the stickier JV route with Vivo (~20% market share in the India smartphone market).

Also, he believes this reflects sustained policy support for electronics manufacturing in India, even in complicated cases.

Should you buy Dixon Technologies shares?

Emkay Global retained a ‘Buy’ rating and raised Dixon Technologies share price target to ₹15,200 from ₹12,500 earlier, to reflect the impact of the PN3 approval.

Motilal Oswal expects a CAGR of 33%, 37% and 36% in revenue, EBITDA and PAT over FY26-28E with EBITDA margins of 3.3% and 4.1% for FY27 and FY28 for Dixon Technologies.

Dixon Technologies stock price is currently trading at 82.5x and 52.6x P/E on FY27E and FY28E EPS. The brokerage retained a ‘Buy’ call on Dixon Technologies shares, and raised the target price to ₹16,100 apiece.

At 9:20 AM, Dixon Technologies share price was trading 3.26% higher at ₹13,930.00 apiece on the BSE.

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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.