Why Dixon Technologies Share Price is Rising

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Why Dixon Technologies Share Price is Rising

Jun 1, 2022

Dixon Technologies shares were in focus today after the company's Q4 results for the March 2022 quarter and financial year 2022 surpassed investors' expectations.

The stock opened at Rs 3,730 and rose 5% intraday to hit Rs 3,939 and finally closed 1.1% higher at Rs 3,846.

Stellar Quarterly Results Drive the Rally

The company reported a 40% YoY increase in revenue for the March 2022 quarter at Rs 29.5 bn on the back of its mobile and EMS division.

The segment's revenue contribution has gone up to 44% from 14% in the year ago period.

Due to the increase in revenue, operating profit came in higher by 48% YoY at Rs 1.2 bn compared to Rs 798 m in the March 2021 quarter.

As a result, the company's net profit rose by 42% YoY. Net profit margins stood flat at 2.9%.

For the financial year 2022, Dixon's revenue rose 66% YoY to Rs 107 bn. However, operating profit rose only 32% YoY as raw material expenses went up.

Overall, the company's net profit rose 17% YoY. Net profit margins fell marginally to 2.4% from 3.4%.

How have the shares of Dixon Technologies performed recently?

Shares of Dixon are currently down 3.3% in the last month and 30% in 2022. The stock is also down 4.1% in the last year compared to 6.6% rise in the BSE Sensex.

The stock has been under pressure due to aggressive selling by FPIs across the board. As a result, the FPI holding in Dixon has come down from 20% to 16% over the last year.

Investors have been concerned due to the decline in the company's operating margin which have fallen due to the sharp increase in raw material costs.

There were also concerns due to the Enforcement Directorate's (ED) seizure of assets of Chinese mobile manufacturing company Xiaomi.

However, the company clarified that there is no adverse impact on the business of the company.

In an exchange filing, the company said,

  • The significant movement in the price of the security of Dixon Technologies (India) can be consequence of recent news circulated widely in the media regarding one of our key customer in LED TV business.

    We would like to submit to the exchange that there is no adverse impact on the business of the company and the company perceives no impact on its receivables.

However, in the last five days, the stock has risen by almost 12%.

About Dixon Technologies

Dixon Technologies is one of the largest design-focused and solutions company in India. It's engaged in manufacturing consumer electronics.

The company's product portfolio includes most consumer electronics we use daily. LED TVs, washing machines, LED bulbs, and tube lights, mobile phones, CCTV - Dixon has its footprint in all of them.

It's the biggest manufacturer of LED TVs in India.

It produces TVs for global and domestic brands like Samsung, Panasonic, Xiaomi, TCL, OnePlus, and many more. The biggest part of the company's revenues (over 45%) is from the LED TV segment.

Display manufacturing is very complex and technology-intensive. The problems are huge capital investment, high risk, and rapid changes in technology.

Despite being in a capital-intensive sector, Dixon has maintained a footprint, across verticals, with little debt on its books.

To know more about the company, check out Dixon Technologies fact sheet and quarterly results.

You can also compare Dixon Technologies with its peers.

Dixon Technologies vs Wonder Fibromats

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here...

Ayesha Shetty

Ayesha Shetty is a financial writer with the StockSelect team at Equitymaster. An engineer by qualification, she uses her analytical skills to decode the latest developments in financial markets. This reflects in her well-researched and insightful articles. When she is not busy separating financial fact from fiction, she can be found reading about new trends in technology and international politics.

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