Dixon Tech share: Dixon Technologies’ share price pared intraday gains partially on Friday, after the company issued clarification on its capex plans. Dixon share price had moved up 5.4 per cent in morning deals, to hit a fresh record high of Rs 11,452 per share. At 2:30 PM, however, it was quoting 2.6 per cent higher at Rs 11,142 per share.
By comparison, the benchmark BSE Sensex was up 124 points, or 0.16 per cent, at 76,935.
“Currently, however, there is no specific business opportunity which the company is evaluating or have formalised which entails any definitive disclosure to the stock exchanges,” it said in a statement.
The clarification comes after ET reported that Dixon Technologies India has lined up Rs 1,500-1,800 crore investment over the next three years to expand production capacity and component manufacturing.
Quoting Vice Chairman and Managing Director Atul B. Lall, the report said the consumer electronics manufacturer will generate the funds from internal accruals based on cash flow.
“Around one-third of the capex will be invested in backward integration of components. This fiscal itself, we will invest around Rs 570 crore. We will not be shy of making investments since our balance sheet is very strong with no debt. The total primary equity raised was Rs 60 crore that too during the IPO. The cash we generate is more than enough, but if required will also raise equity for any large ticket deals,” said Lall.
According to the report, Dixon Technologies could utilise 60-65 per cent of this year’s capex proceeds towards building on mobile phone capacities; and Rs 180-200 crore on display modules and the balance on other products.
Dixon is also keen to venture into non consumer electronic manufacturing services business and is looking for land to set up a factory to manufacture electronic modules for electric vehicles, the report said.
Dixon Technologies (India) Limited is the largest home grown design-focused and solutions company engaged in manufacturing products in the consumer durables, lighting and mobile phones markets in India. Their diversified product portfolio, as per their website, includes consumer electronics like LED TVs; home appliances like washing machines; lighting products like LED bulbs and tubelights, downlighters; mobile phones; CCTV & DVRs; Wearables; and Refrigerators.
Dixon also provides solutions in reverse logistics i.e. repair and refurbishment services of LED TV panels.
Reports suggest the Ministry of Electronics and Information Technology (MeitY) may acquire land to set up factories under certain high-value electronics component categories with an expected outlay of Rs 30,000 crore.
The subsidy scheme for electronics components manufacturing could be a part of the government’s 100-day agenda.
According to analysts at YES Securities, Dixon will continue to deliver strong growth in the medium term as it has been able to add new customers on consistent basis; New product category like refrigerator and IT hardware to start meaningful contribution current fiscal; Increasing ODM offering by providing new technologically advanced solutions; tapping exports opportunities; and investing in backward integration to improve efficiency.
On the margin front, the company is looking to improve its margin by increasing scale, backward integration, and cost optimisation initiatives. The company is also prudent in employing its capital and constantly endeavoring to improve its return ratios.
“We have maintained our target multiple to 55x considering improved performance and confidence exuded by the management of getting new customers on board. We now build-in FY24-26E Revenue/Ebitda/PAT CAGR of 40 per cent/42 per cent/50 per cent,” it said.
First Published: Jun 14 2024 | 2:57 PM IST