DIXON

✅ What’s going well

✅ What’s going well Dixon Tech reported strong Q2 FY26 results: revenue rose ~29% year-on-year to around ₹14,855 crore, and net profit jumped ~72% to about ₹670 crore. The company is executing a strategic shift: it’s increasing backward integration (manufacturing components like camera modules/fingerprint modules, etc.), which should improve margins over time. Dixon is expanding via acquisitions and JVs: e.g., it announced acquiring a 51% stake in Kunshan Q Tech Microelectronics (India) Pvt Ltd for ~₹553 crore to strengthen its component business for mobiles/IoT/automotive. It is capitalising on the “Make in India / China+1” manufacturing trend: With global brands shifting supply away from China, Dixon is well-positioned as an Indian EMS (electronics manufacturing services) player. Financials show strength: For the year ended Mar 2025, the company delivered much higher revenue growth and strong return on equity, while interest and employee costs remain moderate. ⚠️ Areas of concern / things to watch Although top‐line and profit grew, the margin (EBITDA margin) remains fairly thin (in single digits) and some brokers have flagged near‐term margin pressure especially in the mobile/EMS business as product mix shifts. Dixon lowered its volume guidance for mobile phones: For FY27 the target is now 55–60 million units (down from 60–65 m earlier) due to uncertain demand. Despite good results, the share price reacted weakly: The stock fell ~4-7% in a few sessions after results. That implies that expectations may have been elevated, or that investors are concerned about near-term risks. The valuation is already high in many peers’ comparison; if growth or margins disappoint, there is risk of correction. Execution risk: The strategic bets (component manufacturing, new JVs, ramp-up of capacity) take time. Until those scale up, the benefit may only be gradual.