Dixon Tech shares underperforming is a buying opportunity; JPMorgan projects 20% upside

Brokerage firm JPMorgan has reiterated its "overweight" rating on Dixon Technologies Ltd. with a price target of ₹19,500, calling the recent decline in the stock a buying opportunity.

Shares of Dixon Technologies have declined 10% in the three trading sessions before Wednesday, in comparison to the 1% drop seen on the Nifty 50 index. JPMorgan wrote in its note that there is no fundamental reason behind the fall seen in the stock.

JPMorgan's price target implies a potential upside of 20% from Tuesday's closing price.

The brokerage expects Dixon to remain a “high-quality earnings compounder” over the next three years, led by growth in its mobile business between financial year 2025 to 2027. Beyond that, the brokerage sees Dixon's non-mobile verticals such as refrigerators, washing machines, IT hardware, telecom, and lighting supporting growth as they scale up.

A key upside trigger, according to JPMorgan, is Dixon’s component manufacturing foray through three initiatives — its joint venture with HKC, the acquisition of Q Tech India, and a JV with Chongqing Yuhai. The brokerage believes the market has yet to fully price in the potential benefits Dixon's Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) will fetch through these moves.

JPMorgan highlighted two near-term catalysts for the stock - Government approval for the Dixon-HKC joint venture and any updates on the potential renewal of the production-linked incentive (PLI) scheme for mobiles, which is set to end in March 2026.

Shares of Dixon Technologies are off the highs of the day, currently trading 0.2% higher at ₹16,360. The stock is down 7% in the last one month.

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