Emkay on Dixon stock: Initiates buy with 22.70% upside potential

Emkay has initiated a buy call on Dixon Technologies with a target price of ₹20,000/share, implying an upside potential of 22.70% from its current market price of ₹16,300. The brokerage highlighted several growth drivers and strategic advantages for the company.

Key highlights:

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  1. Growth prospects:
    • Dixon has successfully gained leadership across verticals and expanded into adjacent markets.
    • The company is expected to dominate the rising smartphone assembly opportunity, capturing an incremental 70-75% market share, potentially increasing its overall share to ~44% by FY35E.
  2. Margin improvement and integration:
    • Aggressive backward integration has led to significant margin improvements and opens up opportunities for third-party sales and exports.
  3. Additional opportunities:
    • Potential growth from industrial PCBs and auto electronics, targeting a ₹4 trillion market by FY35E.
  4. Earnings outlook:
    • Emkay projects a 20%/40% sales/EPS CAGR over FY25E-35E, with FY27 EPS estimates 17% above consensus.

Emkay believes Dixon’s robust prospects and leadership position justify its premium valuation, with an implied Dec-26 EV/EBITDA of ~41x.

Disclaimer: This article is for informational purposes only and does not constitute financial advice.