Shares of Dixon Technologies India hit their fresh 52-week low after the firm reported Q3 earnings that disappointed Dalal Street. Management also cut FY23 revenue guidance citing lower mobile revenue, which dampened investor sentiment. Dixon Technologies shares opened 7.86% lower at Rs 3100 on Friday against the previous close of Rs 3364.65. Extending losses, the stock slipped up to 20.55% to a 52- week low of Rs 2673.05 on the BSE. The market cap of the consumer durables firm fell to Rs 16,304 crore. Total 2.21 lakh shares changed hands over the counter amounting to a turnover of Rs 61.61 crore. At 12:58 pm, the stock was trading 18.64% lower at Rs 2737 on BSE.
The company’s third-quarter net profit rose 12% to Rs 51.9 crore, missing analyst estimates of Rs 73.9 crore for the said quarter. In Q3 of the previous fiscal, the firm reported a profit of Rs 46.38 crore. However, sales slipped 21.75% to Rs 2,404 crore in the December quarter against Rs 3,073.25 crore in the corresponding quarter of the previous fiscal.
JM Financial has trimmed its target price by 20% to Rs 4000 against the previous target of Rs 5,000.
“We cut our earnings forecast by 12-16% to factor in demand weakness, resulting in 40% EPS CAGR over FY22-25E vs 43% CAGR in last 3 years. We maintain BUY with revised target price of Rs 4,000, as we cut our target PE multiple to 45x Mar’25E (vs 50x earlier) as we are likely to witness near term weakness,” said JM Financial.
Emkay Global said Dixon’s PAT for 3QFY23 was 30% below consensus estimates. Consumer electronics and lighting sales declined by more than 35% YoY, and were the main segments that dragged down sales.
The brokerage said, “We have cut our FY23e-FY25e EPS by 16-20% largely on account of lower sales, while margin remains at 4%. We maintain HOLD on the stock, with Dec-23 target price of Rs 3,165 per share based on 35x PE. Sales ramp-up remains the key monitorable going forward, in our view. Risks include slowdown leading to lower requirement by brands.”
YES Securities has a neutral stance on the stock with a target price of Rs 3506 against the current market price of Rs 3365.
“Considering sluggish demand environment management has revised its revenue guidance downwards. Dixon has fared better on margin front despite lower volumes as it has undertaken value engineering and cost reduction activities. Considering management’s guidance and subdued demand environment, we have made downward revision to our estimates. We however upgrade the stock to Neutral as stock has already corrected sharply and Strong growth momentum is expected to resume as 1) Order book across the categories continues to remain healthy; 2) New capacities have started commercial production; 3) Revenues from new product categories like wearables and refrigerators will drive incremental growth; 4) New JV in, Wearables and Telecom products will add further growth levers. 5) Lighting exports has started in Q3 with order from UAE and has got additional orders. We roll forward our valuation multiple and now value the company at 40x vs 50x earlier as there could be downside risk if the demand environment remains sluggish for extended period. We however upgrade the stock to Neutral from reduce as stock has seen sharp correction.”
Dixon Technologies (India) is the largest home-grown design-focused and solutions company engaged in contract manufacturing products in the consumer durables, lighting and mobile phones markets in India.
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