Dixon Technologies — Resilient performance in a harsh environment; Hold the buy: Axis Securities

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Dixon reported consolidated revenue of Rs 2,953 Cr in Q4FY22, down 3.9% quarter on quarter but up 40% year on year, driven by strong growth in the Mobiles and Appliances segment.

Although the gross margin decreased by 96 basis points quarter-on-quarter, it improved on a year-on-year basis. The company’s EBITDA margins improved 65 basis points to 4% (vs. 3.4% in Q4FY21) due to operating leverage, cost improvements across all segments and price increases are companies to mitigate increases in RM.

The PAT stood at Rs 63 Cr against Rs 46 Cr at Q4FY21. Dixon continues to focus on acquiring new customers and adding products to drive top line growth, upstream integration and increased ODM revenue.

We believe Dixon will continue to benefit from the strong backlog and execution capabilities to expand operations and enter new product segments while leveraging PLI programs in multiple segments.

We expect revenue/PAT to grow at a CAGR of 38%/52% between FY22-24E, taking into account profitable growth across all segments. We price Dixon at 50x FY24 EPS of Rs 89, arriving at the target price of Rs 4,450. (Vs. Rs 4,500 earlier). Hold BUY.

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