Global brokerage CLSA has reiterated its ‘High Conviction Outperform’ rating on Dixon Technologies, setting a target price of ₹19,000, citing the company’s aggressive push to deepen value addition in its smartphone manufacturing vertical.
The trigger? A strategic announcement that Dixon will acquire a 51% stake in Q Tech India, which operates a camera module manufacturing unit with a capacity of 4 million units per month. Alongside, Dixon will also form a 74:26 joint venture with Chongqing Yuhai, a leading Chinese firm, to manufacture precision enclosures — the outer casing for smartphones.
These moves come close on the heels of its existing partnership with HKC for display modules. According to CLSA, these three capabilities — camera modules, enclosures, and displays — could collectively raise Dixon’s value addition per smartphone from the current 15–17% to 45–55%, marking a transformational shift in its contract manufacturing model.
“Such backward integration and component manufacturing are not just margin accretive but also open up new high-revenue opportunities through external sales,” CLSA said in its note. The brokerage expects Dixon’s margins to improve by 150–200 basis points over time as these new verticals mature.
Dixon has been a marquee beneficiary of the Indian government’s Production Linked Incentive (PLI) scheme and is fast evolving from a simple contract assembler to a component-to-finished-product electronics manufacturing powerhouse. With global brands focusing on the China+1 strategy and shifting sourcing to India, Dixon’s early investment in component capabilities could place it at a significant competitive advantage.
CLSA believes these developments support Dixon’s premium valuation and long-term earnings growth trajectory. The stock has already seen strong re-rating over the last year and continues to remain one of CLSA’s top picks in the Indian manufacturing theme.
