Dixon Technologies Q4 earnings largely disappointed investors on Wednesday with the stock falling 8% intraday due to valuation concerns on the Electronics manufacturing services (EMS) counter. Gaurav Garg from Lemonn Markets Desk said despite posting strong results, Dixon Technologies fell 6% due to valuation concerns.

Later, the stock closed 5.79% lower at Rs 15,607.70 with Dixon Tech’s market cap slipping to Rs 94,105 crore. 

Gaurav Sharma of Globe Capital believes further correction is necessary for providing a favourable entry point in the stock. 

“Dixon is trading at a high valuation, but it is also performing consistently. The company’s sales figures are high and the quarterly numbers are good. I see this particular dip as a fresh buying opportunity. A further drop close to Rs 15,000 level would be a perfect point to buy the stock,” Sharma said. 

BNP Paribas retained its outperform call on the Electronics manufacturing services (EMS) stock.  It has a target price of Rs 17,910 on the stock. 

“We expect Dixon to deliver c35%/c43% revenue/PAT CAGR over FY25-28, mainly led by c39% revenue CAGR in the mobile & EMS segment. While Dixon is reaping the benefits of the mobile PLI scheme (division revenue grew c22x to INR110b from cINR5b over FY20-24), we think it will next emerge as a key beneficiary of the PLI 2.0 scheme for IT Hardware, capturing c10% market share over the next 3-4 years,” said BNP Paribas. 

The brokerage assigned a 60 times target P/E multiple to its Mar-27 EPS estimates, which is close to its 5-year average NTM P/E multiple (c66x). It believes that Dixon’s strong earnings growth potential (FY25-28E PAT CAGR of c43%) and a strong return ratio profile should continue to justify its premium valuation.

Motilal Oswal expects the stock to hit the Rs 20,500 mark in the next one year. It has retained its buy call on the stock. 

“We expect Mobile segment growth to continue in the coming years, while consumer electronics will remain under pressure for some more time. The commissioning of its display facility and its foray into other components such as camera modules, batteries and enclosures through ECMS will help Dixon improve its margin profile once PLI ends. We marginally tweak our estimates and maintain our DCF-based TP of Rs 20,500 on Mar’27 estimates,” said the brokerage. 

YES Securities said a majority of positives are captured in the current market price. It gave a reduce call on the stock. 

“Dixon is expected to deliver strong revenue performance given the ramp up in its existing customer base and company has on boarded new customers in FY25. We now build-in FY25-27E Revenue/EBITDA/PAT CAGR of 48%/46%/55%, we value the stock at 55x FY27 EPS. We assign REDUCE rating and will wait for correction to enter the stock,” said YES Securities while assigning a price target of Rs 15,741, down 6.6% from 16,566. 

Commenting on the Q4 performance, the brokerage said, “Dixon 4QFY25 performance has been mixed bag with revenue missing estimates, while EBITDA is ahead of estimates. Revenue beat was driven by strong performance of Mobile phones and EMS business has seen continued growth of 194% as existing customers have been increasing offtake and ramping up volumes from the new customers.”

The firm reported a 322% year-on-year rise in Q4 profit to reach Rs 401 crore powered by an one-time exceptional gain of Rs 250.4 crore. Revenue also climbed 121% year-on-year to Rs 10,292.5 crore, a significant jump from Rs 4,658 crore in the previous year.

Dixon Technologies (India) is the largest home-grown design-focused and solutions company engaged in contract manufacturing products in the consumer durables, lighting and mobile phones markets in India.