Buy Dixon Technologies; target of Rs 10,700: Dolat Capital Market

Dolat Capital Market's research report on Dixon Technologies

Winning a PLI has Dixon well placed to capture the mobile local manufacturing opportunities. It is expected to see an eight-fold jump in its mobile revenues (at the cap revenue for incentives) in FY22. At a 3% EBIDTA margin, the expected revenues from PLI should catapult its EPS to Rs236 from Rs165, while FY23 is expected to see an EPS of Rs297. We had downgraded the stock in Q1 purely on valuations based on our earlier numbers devoid of PLI.

Outlook

We incorporate the PLI numbers in our estimates, which gives it an earnings CAGR of 23% over FY20-23E. While we maintain our earlier multiple of 40x, we roll forward to Sep-22 which gives us a new target price of Rs10,700, and upgrade the stock to Buy.

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