Dixon Tech valuations factor in the risks, Investec says after 40% drop in four months

Brokerage firm Investec has maintained a 'Buy' recommendation on Dixon Technologies (India) Ltd., but cut its price target by 21% to ₹15,000 from ₹18,900 earlier.

Despite the downgrade, the revised target still implies an upside potential of 36% from the stock's last closing level.

Dixon Technologies shares have corrected around 40% over the past four months, largely due to uncertainties around delays in government approvals for the Vivo and HKC joint ventures, along with a slowdown in consumer demand, especially in the mobile segment.

Investec has lowered its FY26-28E EBITDA estimates by 5-14% to bake-in above concerns.

The brokerage said that the stock now trades at around 40x FY28E earnings, compared with nearly 60x three to four months ago, which it believes more than factors in the near-term headwinds.

Investec expects approvals for the Vivo and HKC joint ventures to come through over the next couple of months, which should support revenue growth and margin visibility in FY27 and FY28.

It also believes Dixon will continue to increase value addition across mobiles, IT hardware and telecom categories through backward integration.

On Street view, 26 of the 34 analysts tracking Dixon Technologies have a 'Buy' rating, while two recommend 'Hold' and six have a 'Sell' call.

Phillip Capital remains among the most bearish on the stock, with a price target of ₹9,085, the lowest on the Street and the only one below the ₹10,000 mark.

Shares of Dixon Technologies settled 2.68% higher on Monday at ₹11,020, though the stock remains down 7% over the last five sessions.