This Stock is Up 2,700% Since its IPO: Here's Why it Might Split in 2025

There are various corporate actions like dividend, bonus shares, share splits, buybacks, etc that a company can announce to reward shareholders, distribute reserves among owners and improve liquidity in the market.

A stock split is a corporate action in which a company divides its existing shares into multiple new shares, increasing the total number of shares outstanding while maintaining the overall value for shareholders.

This move does not change the total value of a shareholder's investment, as the price per share decreases proportionally.

For example, in a 2-for-1 stock split, each shareholder receives two shares for every one share they already own, but the price of each share is halved.

Companies typically perform stock splits when their stock price becomes too high, making it less accessible for smaller investors, or when they want to increase liquidity and attract a broader base of investors.

Stock splits can be an indication of a company's confidence in its future growth, as they often occur after the company's stock price has risen significantly.

In this article, we'll explore one high growth company that has returned over 2,700% since its IPO and may well be ready for a stock split.

The stock we are talking about here is Dixon Technologies Ltd.

Dixon Technologies (India) Limited, incorporated in 1993, is an electronic manufacturing services (EMS) company with operations in the electronic products vertical.

The company deals in products in sectors such as consumer electronics, lighting, home appliance, closed-circuit television cameras (CCTVs), and mobile phones. It also undertakes reverse logistics operations.

It also manufactures security surveillance equipment, wearables & audibles, AC-PCBs. Recently, the company entered in a JV with Imagine Marketing Private Limited for designing and manufacturing wireless audio solutions in India.

Dixon is the one of the largest LED TV manufacturers in India and it services more than 35% of India's requirement.

The company's revenue split is as follows: 60% from mobile EMS, 25% from consumer electronics, 12% from lighting products, 7% from home appliances, and the balance 3% from security systems.

Headquartered in Noida, Dixon tech has around 22 manufacturing facilities (at a consolidated level) across Noida, Dehradun, Ludhiana, and Chittoor (AP).

Dixon has an annual production capacity of 30 m smart phones and 50 m feature phones across four plants in Noida.

In February 2024, the company launched a new factory at Dehradun for manufacturing washing machines with a capacity of 2.4 m units per annum.

Financial Snapshot

As we can see from the above table, Dixon has been growing its revenues at a whopping 42% compounded annual growth rate (CAGR) over the last 4 years.

EBITDA and profit after tax have also grown at 33% CAGR respectively. Dixon has also been able to improve its margins from 3.6% in FY22 to 4% in FY24.

The company continued its growth in first half of FY25 with revenue growth coming in at 120.5% over H1FY24. EBITDA margins however declined to 3.7% in H1FY25 compared to 4% in H1FY24.

Dixon's profit after tax also trebled from Rs 1.8 bn in H1FY24 to almost Rs 5.4 bn in H1FY25 on the back of robust sales growth and one time exceptional item.

The strong performance in operations is on the back of strong growth in the Indian electronic manufacturing system ecosystem and government push on production linked incentive schemes.

The company has a healthy order book from brands including Motorola, Xiaomi, and Oppo, with production for a large global brand expected to commence by end of November 2024.

Dixon is taking one step towards backward integration as it looks to foray into display fabrication business with a capital outlay of Rs 260 bn over a period of time.

Going ahead, the management says that mobile & EMS segments will be significant growth drivers. It aims to scale the current mobile manufacturing capacity from 25-30 m to 40-45 m pieces by 2026.

IT hardware business is also expected to be a significant growth driver as top four global brands are in tie-up with Dixon for manufacturing of laptops. Dixon has already started manufacturing for Acer. To cater to upcoming demand, Dixon has setup a plant in Chennai with a capacity of 1.5 m units.

Onboarding of new major clients in IT hardware segment has set the floor for Dixon exponential performance over coming years. Strong order books and a client base of the top-most players of the industry gives a strong support to lead the growth in mobile and IT hardware segments.

The industry is expected to post a strong growth of 35% CAGR over FY24-30 backed by various macro tailwinds and government support.

As we can see in the chart above, the stock price of Dixon Technologies has returned a massive 2,700% i.e., it jumped 27 times since its listing in September 2017. The share price has moved up from Rs 550 in September 2017 to almost 17,000 in January 2025.

The company has already undertaken stock split once during its listing history.

On 2 February 2021, the board announced a stock split in the ratio of 1:5. The stock underwent a split on 18 March 2021. Every share with a face value of Rs 10 got divided into five shares with a face value of Rs 2 each.

Recently, another company from the same electronic manufacturing sector, PG Electroplast Ltd, underwent a share split.

In May 2024, PG Electroplast announced that it will be splitting its shares in the ratio 10:1, which means that for every share having face value of Rs 10, there would now be 10 shares having face value of Re 1.

Dixon Technologies shares have a face value of Rs 2, which means they have the potential for one more stock split. However, the company has not officially announced any such plans yet.

The stock has risen 156% so far over the last 12 months. Dixon has given negative annual returns only twice since its listing - once in 2018, when the stock had halved, and the other was in 2022, when it fell 30%.

Given the high growth achieved in the past and excellent operating metrics over the last few years, the stock currently trades at 144 times its trailing twelve months earnings.

However, there is a risk of valuations correcting sharply if there is slowdown in the company's growth trajectory or margins start deteriorating further as competition intensifies. The sector is also a big beneficiary of government support due to PLI incentives.

Any change in regulations can also affect the operating metrics of the company and stall its growth trajectory.

Investors must remain cautious and conduct proper research about the risks involved in the business model before diving headfirst.

Happy Investing.

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