Dixon Technologies share price slips over 3% after Morgan Stanley cuts rating on rising competition

Dixon Technologies share price in focus today: Shares of Dixon Technologies fell 3.3% in Tuesday's trade (July 01), dropping to ₹14,853 apiece, even as the broader Indian stock market traded in positive territory. The decline came as investor sentiment turned cautious after global brokerage firm Morgan Stanley downgraded the stock to ‘Underweight,’ even while raising its target price to ₹11,563 per share from ₹8,696 earlier.

The brokerage flagged rising competition in the electronics manufacturing services (EMS) business, particularly as government incentives for the sector near their end, a concern also echoed by Phillip Capital last week.

Amid intensifying competition, Morgan Stanley expects core EMS earnings growth to slow by 46% over FY25–27, with a further 18% decline projected between FY27–30. While it acknowledged Dixon’s entry into component manufacturing as a positive strategic move, it noted that the segment is a deep cyclical business requiring substantial capital investment and R&D spending.

Earlier, Phillip Capital lowered its target price for Dixon to ₹9,085, down from ₹11,077, citing slowing earnings growth as company's largest clients, Motorola and Longcheer, begin diversifying their supply chains.

Motorola contributes approximately 40% of Dixon’s mobile phone volumes but nearly 72% of its mobile phone revenues. Dixon had significantly benefited from Motorola’s market share gains in the Indian smartphone market in CY24 compared to CY23.

In CY23, when Motorola was a smaller player, Dixon handled its entire manufacturing. As Motorola scaled up, it began outsourcing some of its volumes to Karbonn to diversify its supply chain, Phillip Capital noted.

Reflecting the growing competition in the mobile phone assembly space, Phillip Capital has cut its revenue, EBITDA, and PAT estimates for Dixon Technologies for FY27 by 4%, 6%, and 9%, respectively.

Dixon Technologies share price trend

After reaching a fresh all-time high of ₹19,149 apiece in December last year, the stock came under pressure, losing 35% of its value over the following four months to hit a 10-month low of ₹12,326.

Following the steep fall, the stock rebounded in April with a 25% gain and is currently trading 17% above that recent low.

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