ICICI Direct's research report on Dixon Technologies (India)
Dixon witnessed strong revenue, PAT growth of 47%, 33%, respectively, in FY21 despite loss of sales in Q1. The strong growth came on the back of customer additions in consumer electronics and mobile & EMS segments in FY21. The company has outlined a capex of Rs 200 crore in FY22 for a brownfield expansion in TVs, washing machines, mobile phones and to start a new manufacturing unit for direct cool refrigerators. Dixon has also applied for PLI schemes in electronics/technology products, telecom products and LED lights & AC component manufacturing. The approval for all applications are expected within H2FY22. Entry into new product categories and customer additions into existing product categories (especially in washing machines, LED lights & mobile phones) would help drive revenue at a CAGR of 63% in FY21-23E. The company’s balance sheet remains strong with stringent working capital policy (with cash conversion cycle of seven days) with RoE, RoCE at ~22%, 24% in FY21, respectively.
Outlook
We reiterate our BUY recommendation on the stock with a revised target price of Rs 4635 (earlier Rs 4270).
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