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What is the story about?
Brokerage firm CLSA has downgraded shares of Dixon Technologies Ltd. in its latest note on Tuesday, June 16, but has maintained its price target, which is among the lowest on the street.
CLSA has downgraded Dixon Technologies to "underperform" from its earlier rating of "hold" but maintained its price target of ₹10,400, which implies a downside potential of 13% from Monday's closing levels.
As many as five analysts among the 32 who track Dixon Technologies have price targets below the mark of ₹10,000.
CLSA wrote in its note that the recent rally on expected approvals seen in shares of Dixon Technologies is "overdone." Shares of Dixon Tech have rallied 24% from the March 30 closing levels of ₹9,637. Since then, the stock has gained 15% in April, and 3% each in May and June so far.
The brokerage expects Dixon Tech's organic volumes to decline in financial year 2027 as it expects elevated memory prices to have a disproportionate impact on the Indian smartphone volumes.
Further, a delay in backward integration projects could also pose downside risks to estimates for the stock, according to CLSA, who added that with domestic smartphone market share plateauing, it expects growth to decelerate over the medium-term.
At 46 times financial year 2028 estimated price-to-earnings, CLSA finds Dixon's risk-reward to be unfavourable.
Among the 32 analysts who have coverage on Dixon Tech, 22 of them have a "buy" rating, three say "hold" and seven others have a "sell" rating.
In an interaction with CNBC-TV18 on June 4, Sunil Vachani, the founder and Chairman of Dixon Technologies said that he is hopeful of getting the approval to the Vivo JV soon and that the proposal is under active consideration.
He also said that he is excited about the IT hardware space and hence has entered into a partnership with a Taiwanese company. With that JV company, Dixon is looking to manufacture laptops and desktops in India.
Shares of Dixon Technologies are trading 0.6% higher on Tuesday at ₹12,024. The stock is back above the mark of ₹12,000 for the first time after January 5 this year.
CLSA has downgraded Dixon Technologies to "underperform" from its earlier rating of "hold" but maintained its price target of ₹10,400, which implies a downside potential of 13% from Monday's closing levels.
As many as five analysts among the 32 who track Dixon Technologies have price targets below the mark of ₹10,000.
Why CLSA Downgraded Dixon Tech?
CLSA wrote in its note that the recent rally on expected approvals seen in shares of Dixon Technologies is "overdone." Shares of Dixon Tech have rallied 24% from the March 30 closing levels of ₹9,637. Since then, the stock has gained 15% in April, and 3% each in May and June so far.
The brokerage expects Dixon Tech's organic volumes to decline in financial year 2027 as it expects elevated memory prices to have a disproportionate impact on the Indian smartphone volumes.
Further, a delay in backward integration projects could also pose downside risks to estimates for the stock, according to CLSA, who added that with domestic smartphone market share plateauing, it expects growth to decelerate over the medium-term.
At 46 times financial year 2028 estimated price-to-earnings, CLSA finds Dixon's risk-reward to be unfavourable.
Among the 32 analysts who have coverage on Dixon Tech, 22 of them have a "buy" rating, three say "hold" and seven others have a "sell" rating.
In an interaction with CNBC-TV18 on June 4, Sunil Vachani, the founder and Chairman of Dixon Technologies said that he is hopeful of getting the approval to the Vivo JV soon and that the proposal is under active consideration.
He also said that he is excited about the IT hardware space and hence has entered into a partnership with a Taiwanese company. With that JV company, Dixon is looking to manufacture laptops and desktops in India.
Shares of Dixon Technologies are trading 0.6% higher on Tuesday at ₹12,024. The stock is back above the mark of ₹12,000 for the first time after January 5 this year.
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