Morgan Stanley has maintained an Equal-Weight (EW) rating on Dixon Technologies, with a target price of ₹8,696, implying a significant 47.8% downside from the current market price of ₹16,644. Despite better-than-expected operating margins, the brokerage flagged broad-based revenue misses and a sharp tax impact.
In Q4, revenue missed Morgan Stanley’s estimates across all major segments—mobile & EMS by 7%, consumer electronics by 22%, lighting by 7%, and home appliances by 6%. However, EBITDA beat estimates by 8%, driven by operational efficiencies and cost controls.
Employee costs stood at 1.4% of sales vs. 1.8% YoY, while operating expenses came down to 2.2% from 3.7%. Margins improved across the board, with mobile & EMS margins 50bps above estimates, consumer electronics up 255bps, and home appliances higher by 170bps.
However, PAT fell short due to a higher-than-expected effective tax rate of 34.5% (vs. 25.5% in Q4FY24). The quarter also included a one-time gain of ₹2.5 billion from Dixon’s stake sale in Aditya Infotech.
Current market price (CMP): ₹16,644.00
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