SYNOPSIS: Dixon Technologies is in focus after Nomura maintained a Buy rating with nearly 42 percent upside potential, driven by its display JV with HKC, expected margin expansion, and capacity ramp-up plans.
During Friday’s trading session, shares of one of India’s leading Electronics Manufacturing Services (EMS) providers are in focus on the stock exchanges amid multiple developments, including a bullish outlook from the global brokerage firm Nomura following the announcement of its new display joint venture.
We’re talking about Dixon Technologies (India) Limited, which is primarily involved in the manufacturing of electronic goods such as consumer durables, home appliances, lighting products, mobile phones, refrigerators, telecom products and others.
With a market cap of Rs. 62,867.3 crores, shares of Dixon Technologies (India) Limited closed in the red at Rs. 10,339.7, up by over 4 percent, as against its previous closing of Rs. 10,804.5 on BSE. The stock has delivered negative returns of over 22 percent in one year, and has fallen by nearly 9 percent in the last one month.
Latest Updates
As per the 9th March filings, Dixon Tech’s wholly-owned subsidiary, Dixon Display Technologies Pvt. Ltd. (DDTPL), will be converted into a joint venture (JV), with Dixon Tech holding a 74 percent stake and HKC Overseas Limited (HKO), an affiliate of HKC Corporation Limited, having the remaining 26 percent of the equity.
For this, the company has received the necessary approval from the Ministry of Electronics and Information Technology (MEITY), Government of India. This approval had been awaited for quite a long time and was one of the key pending requirements since the JV was first announced in June 2024.
HKC’s investment in the venture required approval from the central government under Press Note 3 of 2020 and the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019, as the transaction involves cross-border investment.
Post-transaction, DDTPL will operate as a JV entity that combines Dixon’s domestic manufacturing presence with HKC’s global expertise in display technologies. The partnership aims to expand the production of advanced display modules to cater to the growing needs of India’s electronics and automotive industries.
The JV will carry on the business of development, manufacturing and distribution of liquid crystal modules and thin film transistor LCD modules and other advanced display modules, to support industries such as mobile phones, notebooks, automotive displays, televisions, monitors, and industrial displays, etc. Further, it will strengthen domestic industries using displays, reduce reliance on international suppliers, and boost manufacturing capabilities in electronics and automotive sectors while supporting component ecosystems under ‘Make in India.’
Brokerage Target & Outlook
Global brokerage firm Nomura has reiterated a ‘buy’ rating on Dixon Technologies, assigning a target price of Rs. 14,678 per share with a potential upside of nearly 42 percent from its Friday’s closing price of Rs. 10,339.7 on BSE. The brokerage values the stock at around 45 times its estimated FY28 earnings per share (EPS). Below are three key factors highlighted by Nomura that support its positive outlook on the stock:
I. Domestic Display Manufacturing Boost
Nomura noted that the Press Note 3 approval for the joint venture (JV) provides greater clarity on the company’s plans to ramp up its display manufacturing capabilities. The JV partner, HKC, is a well-established global display manufacturer that already works with several of Dixon’s mobile customers and has a strong presence across IT hardware and television display segments.
Further, the brokerage believes that this partnership is expected to strengthen India’s domestic display ecosystem, reduce dependence on imports, and support the expansion of local manufacturing capacity across the electronics and automotive sectors.
II. Potential Margin Expansion
Nomura highlighted that display module assembly accounts for nearly 10 percent of the bill of materials and typically offers double-digit margins. It estimates that the new JV could add around 50 basis points (bps) to Dixon’s overall margins by FY28, with the possibility to expand to about 100 bps once the operations reach full scale.
The report also pointed out that Dixon’s broader expansion into components such as display modules and camera modules could increase value addition within the company’s manufacturing ecosystem. Nomura added that camera modules are already in the ramp-up phase and, together with display manufacturing, could act as a structural margin driver over the longer term.
III. Capex Plan & Production Timeline
Nomura estimates that Dixon is investing around Rs. 1,200 crore in the display manufacturing project. Construction of the facility is already underway, with trial production expected to begin in Q2 FY27, followed by a gradual ramp-up in the second half of FY27.
In the initial phase, the plant is expected to have an annual production capacity of around 24 million smartphone display modules and nearly 2 million laptop displays. Over time, this capacity could scale up to about 55 million units annually.
Other Brokerage Views
JPMorgan continues to maintain an ‘Overweight’ rating on the stock, and Jefferies has retained a ‘Hold’ recommendation, citing near-term headwinds such as the rise in DRAM prices and the pending regulatory approval for the proposed Vivo joint venture. The brokerage also pointed out that the stock is currently trading at a relatively higher valuation compared to its peers.
JPMorgan, while maintaining its ‘Overweight’ stance, has revised its target price to Rs. 13,000 from the earlier Rs. 13,700 per share. The brokerage noted that the recent approval of the HKC joint venture could increase the likelihood of the proposed Vivo JV as well.
The brokerage anticipates incremental EBITDA contribution from the HKC JV into its estimates. However, it has reduced mobile volumes projections, citing ongoing pressure from rising memory prices, which is expected to lead to a 13-14 percent reduction in EPS estimates for FY27-FY28.
Despite these adjustments, JPMorgan remains positive on the company’s longer-term prospects. The brokerage expects earnings to grow at a CAGR of around 36 percent between FY26 and FY28, supported by Dixon’s expansion into component manufacturing, particularly through partnerships with Q Tech and HKC.
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