Shares of Dixon Technologies fell 3% in early trade after global brokerage Morgan Stanley downgraded the stock to ‘Underweight’ and lowered its target price to ₹11,563. As of 9:51 AM, the shares were trading 2.96% lower at Rs 14,539.00.
In its note, the brokerage cited concerns over increased competition in Dixon’s core Electronics Manufacturing Services (EMS) segment, particularly after the Production Linked Incentive (PLI) benefits phase out. It also pointed to a likely slowdown in the company’s earnings growth over the medium term.
Morgan Stanley estimates that Dixon’s core EMS business could see earnings growth drop by 46% during FY25–27, followed by a more moderate 18% growth rate between FY27–30. The firm believes that this slowdown could weigh on the stock’s performance going forward.
While the company’s move into component manufacturing is seen as a positive strategic step, Morgan Stanley flagged execution challenges, noting that success in this segment hinges on securing technology partnerships, regulatory approvals, and maintaining cost efficiency.
On Dixon’s entry into the display fabrication space, the brokerage highlighted the deep cyclical nature of the business. It noted that such a venture would require sustained capital investment and R&D expenditure, adding another layer of complexity to the company’s growth plans.
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