Explained: Why UBS, Motilal, Nuvama see up to 45% upside on Dixon Tech

Shares of Dixon Technologies will be in focus on Monday, November 2, after three global investment firms remained positive on the stock following its September-quarter results, with target prices indicating an upside of up to 45% from Friday’s closing price of ₹11,000.

Motilal Oswal reiterated its ‘Buy’ rating and raised its target price to ₹15,900 from ₹15,400, implying an upside of 44.5%. UBS maintained a ‘Buy’ rating with a target of ₹15,600, indicating an upside of 41.8%. Nuvama Institutional Equities upgraded the stock to ‘Buy’ from ‘Hold’, with a December 2027 target price of ₹14,900, implying an upside of 35.5%.

Motilal Oswal raised its FY27 and FY28 estimates, while Nuvama cut its earnings per share (EPS) estimates for both years, citing lower mobile volumes and margins. UBS, meanwhile, expects the Vivo joint venture (JV) and component scale-up to drive earnings growth in FY28 and FY29.

Dixon Q2: Revenue beats estimate, margins hit multi-quarter low

Dixon reported a 48.7% year-on-year (YoY) decline in consolidated net profit to ₹343.7 crore for the September quarter, compared with ₹670 crore in the year-ago period. Revenue rose 46.7% to ₹21,794 crore from ₹14,855 crore, beating the CNBC-TV18 poll estimate of ₹20,235 crore.

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased 6.4% to ₹597 crore, ahead of the poll estimate of ₹579 crore. However, EBITDA margin contracted 110 basis points to 2.7% from 3.8% a year ago, below the poll estimate of 2.9% and at a multi-quarter low. Gross margin also fell 200 basis points to 5.1% from 7.1%.

The decline in reported profit was largely due to a lower fair value gain on Dixon’s stake in Aditya Infotech. The company recognised a gain of ₹57 crore in Q2 FY27, compared with ₹465 crore in the year-ago quarter. Q2 FY26 also included a ₹28 crore gain from the transfer of the lighting business.

On an adjusted basis, EBITDA rose 8% to ₹609 crore, with a margin of 2.8%. Adjusted net profit figures vary across the company and brokerage calculations and should be checked against the final results presentation before publication.

For the first half of FY27, revenue increased 35% to ₹37,341 crore, while EBITDA rose 2% to ₹1,060 crore. EBITDA margin declined to 2.9% from 3.8%. Operating cash flow was negative at ₹280 crore, while net debt stood at ₹73 crore at the end of the half-year, against a net cash position of ₹773 crore at the end of FY26.

What the brokerages are saying

UBS: Buy | Target price: ₹15,600

UBS described the quarter as directionally positive, with EBITDA rising 6% YoY despite headwinds. Its analysis suggests EBITDA per smartphone improved sequentially, helped by a better product mix and operating efficiencies. It also said two quarters of performance after the expiry of the mobile production-linked incentive (PLI) scheme reaffirm underlying profitability.

UBS highlighted the marginal increase in FY27 smartphone volume guidance to 33-34 million units from 32 million earlier. However, Q3 guidance of 7-7.5 million units implies only single-digit growth after four quarters of decline.

The brokerage flagged the delay in commissioning manufacturing at the Vivo JV, which has weighed on the stock, as well as higher working capital due to strategic inventory build-up. It expects the Vivo JV and component scale-up to support an EBITDA compound annual growth rate (CAGR) of 35% in FY28-FY29, despite near-term memory-related headwinds.

Motilal Oswal: Buy | Target price: ₹15,900

Motilal Oswal said revenue and adjusted profit exceeded its estimates, while margins were broadly in line. It highlighted smartphone volumes of 9.7 million units in Q2 FY27, up 29% sequentially, despite a sharp decline in the broader Indian smartphone market.

The brokerage expects growth from new domestic customer additions, higher exports and the Vivo JV, which is expected to start contributing from Q4 FY27. It also sees further scale-up in IT hardware and telecom.

Motilal Oswal raised its FY27 and FY28 estimates by 7% and 2%, respectively, and expects revenue, EBITDA and profit after tax to grow at CAGRs of 29%, 36% and 39%, respectively, between FY26 and FY29.

Nuvama: Buy | Target price: ₹14,900

Nuvama upgraded Dixon to ‘Buy’ from ‘Hold’ following the recent correction in the stock. It noted that mobile manufacturing revenue grew 39% YoY, with realisations up 50% even as volumes declined 8%. IT hardware revenue grew 42 times year-on-year and 60% sequentially.

EBITDA rose 6% YoY, beating Nuvama’s estimate by 3%. The brokerage, however, cut its FY27 and FY28 EPS estimates, citing lower mobile volumes and margins. It noted that Dixon maintained its FY27 mobile volume guidance of 33-34 million units, with Vivo consolidation expected from Q4 FY27.

Mobile manufacturing and IT hardware drive growth outlook

The mobile and other electronics manufacturing services (EMS) division remained the largest contributor, accounting for 92% of revenue against 90% a year ago. Revenue rose 50% YoY to ₹20,093 crore, while its profit before interest and tax (PBIT) margin declined to 2.5% from 3.5%.

The segment included ₹2,160 crore in IT hardware revenue, ₹1,837 crore from telecom, ₹518 crore from Q-Tech and ₹171 crore from hearables and wearables.

Management attributed the margin pressure primarily to the expiry of mobile PLI 1.0 and elevated global memory prices. Memory, which earlier accounted for around 12-13% of a smartphone’s bill of materials, has become significantly more expensive. Selling prices have risen around 35-40% YoY, while volumes were marginally lower.

Dixon reported smartphone volumes of around 9.7 million units in Q2 and 17.2 million units in H1 FY27, despite a 26% YoY decline in the Indian smartphone market during the quarter. It expects Q3 volumes of 7-7.5 million units and a recovery to around 9.5 million units in Q4.

Growth is expected to be supported by new customer additions and exports. Production for Motorola has started, with a meaningful ramp-up expected from Q4. Management indicated a potential volume outlook of around 3.5 million units per quarter from the customer, including annual exports of 6-7 million units. Dixon is targeting smartphone exports of 3.5-4 million units in FY27.

The company has also onboarded a large Indian brand, with production underway. Management indicated that the customer could add 6-8 million units next year, with potential volumes of up to 8-10 million units. The Vivo JV could add 18-21 million units from Q4 FY27, taking total smartphone volumes, including Vivo, to 55-60 million units in FY28.

Motilal Oswal expects margins to recover from FY28 as backward integration in components such as displays, solid-state drives (SSDs) and mechanical parts, along with higher volumes and operating leverage, starts contributing. It also flagged risks from slower-than-expected market growth, loss of key clients, competition and limited bargaining power with customers.

Dixon Technologies shares ended 4.25% lower at ₹11,000 on Friday, ahead of the results. The stock has fallen around 9% so far in 2026 and 29% over the past 12 months.

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