Dixon Technologies shares hit 10% lower circuit on sequential earnings drop

Shares of Dixon Technologies (India) fell by 10% on January 21, 2025, hitting a price of Rs 15,804. This happened after the company reported a decline in its earnings for the quarter ending December 2024. The company's net profit dropped 47.5% compared to the same time last year, from Rs 411.7 crore in Q3FY24 to Rs 216 crore in Q3FY25. Additionally, Dixon's revenue fell by more than 9%, reaching Rs 10,453.7 crore for the quarter.

The stock has also dropped 12% in value since the beginning of this year, underperforming the Nifty 50 index, which only declined by 1.5% during the same period.

Jefferies, a well-known financial services firm, has given Dixon Technologies an 'Underperform' rating. They set a target price of Rs 12,600 for the stock. Jefferies pointed out that Dixon's consumer electronics sales had fallen by 32% compared to last year. They believe the stock is too expensive at its current valuation of 107 times the expected profit for FY26.

Motilal Oswal Financial Services also warned about some risks the company might face. These include slower-than-expected market growth, the possibility of losing important clients, stronger competition, and having less control when negotiating with clients.

On the other hand, Nuvama Institutional Equities raised their target price for Dixon to Rs 18,790 from Rs 16,400, while keeping a 'Hold' rating on the stock. Nuvama said that they still believe in Dixon's strong performance and future potential. However, they are waiting for the stock price to drop to a better level before making any further decisions. Nuvama also lowered its earnings forecast for the next few years due to weaker sales in the TV segment, concerns about its joint venture with Vivo, and the full consolidation of its partnership with Ismartu.

In December 2024, Dixon formed a joint venture with Vivo and is planning to enter the Display Fab manufacturing industry, depending on government incentives.

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