Dixon Tech shares gain over 9% even as bears highlight earnings concerns, bulls cut estimates

Dixon Tech Ltd.'s near-term earnings are vulnerable to a sustained escalation in global memory prices, brokerage firm CLSA said in its note on Wednesday, May 13. It went on to add that the visibility on medium-term growth remains weak as the company's market share in the smartphones peak.

Despite the concerns, the stock gained as much as 9% on Wednesday, marking the biggest single-day advance in over two months. The stock had gained 11% in March as well.

CLSA is one of the four analysts tracking Dixon Technologies that have a "neutral" rating on the stock. It has cut its price target on the stock from ₹12,100 to ₹10,400 earlier.

Dixon Tech In Q4

For the March quarter, Dixon Tech's results were largely in-line with expectations.

The company is targeting ₹56,000 crore in revenue without Vivo and mobile revenue remaining flat. The management is targeting 15% to 17% revenue growth without Vivo JV in the overall company growth.

On the Vivo JV front, the management said that the discussions with the government are at an advanced stage and that they are "very close" to a positive outcome.

Kotak Remains Bullish

Kotak Institutional Equities has maintained its "buy" rating on Dixon and a price target of ₹15,200.

However, the brokerage has lowered its estimates for the stock by 7% and 13% respectively for financial year 2027 and 2028, in order to factor in a one-quarter lag in the Vivo JV's contribution, flat smartphone volumes and a delay in entry into the display fab.

Jefferies Banks On Vivo

Jefferies also has a "hold" rating on Dixon with a price target of ₹10,280, stating that despite a 35% fall in the stock price over the last six months, Dixon trades at 51 times its financial year 2027 estimated price-to-earnings, which is higher than many of its EMS peers.

Ex-Vivo, Jefferies expects a weak outlook for domestic smartphones volumes for Dixon, which are likely to be flat year-on-year.

Execution Key Says HSBC

HSBC also has a "hold" rating with a price target of ₹12,000 for Dixon.

The brokerage said that with the management discussing a multitude of new growth levers, including data center servers, timely execution is the key.

Yet, it has cut its financial year 2027 EPS estimates by 4% to factor in the delay in the Vivo JV.

23 out of the 32 analysts tracking Dixon Tech have a "buy" rating on the stock, four say "hold", while five have a "sell" rating.

Shares of Dixon Tech are trading 8.1% higher on Wednesday at ₹10,961.