Dixon Tech Q4 Results: Softer smartphone volumes to impact topline, margins may narrow

Shares of Dixon Technologies Ltd. are trading at the lows of the day on Tuesday, May 12, ahead of its fourth quarter results which will be reported today.

According to a CNBC-TV18 poll, the company's revenue is likely to decline by 1% from the year-ago period to ₹10,239 crore, while its Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter may decline by 16% from last year to ₹372 crore.

EBITDA margins may also decline by 70 basis points from last year to 3.6% from 4.3% earlier. Lower volumes will have an impact on the overall costs as well, thereby impacting margins.

Net profit for the period is not comparable due to the fair value gain in the base quarter. Brokerages are assuming a different post tax figure as adjusted net profit.

What To Expect From Dixon

The quarter is likely to be a soft one for Dixon, as softer smartphone volumes in the mobile and EMS segment could impact the company's topline.

Weakness in Xiaomi and Ismartu volumes could also hurt Dixon's mobile business this quarter. Higher memory prices, tight availability of DRAM is likely to have weighed on handset production, thereby limiting volume growth, despite incremental contributions from IT hardware, telecom and the components business.

Key Things To Watch

• Commentary from the mobile display project


• Update on the PN3 approvals, Vivo JV


• Commentary on any disbursement and extension of the PLI scheme


• Any new customer onboarding


• Mobile volumes in the current high memory price scenario


• Ongoing expansion on backward integration

The recent sell-off in shares of Dixon have extended the stock's year-to-date losses to 15%. However, the stock is still managing to hold above its recent 52-week low of ₹9,600.