Dixon Tech rallies as government scraps import duty

The Finance Ministry on Tuesday has scrapped import duty on open cell LED TV panel from earlier 5 per cent. This will be applicable with immediate effect. This development is positive for the companies like Dixon Technologies, which is contract manufacturer of electronic item.

With response to this development, the stock of Dixon Technologies surged nearly 6 per cent to touch intra-day high of Rs. 2597.90. Consumer electronics accounts for nearly 40 per cent of the company’s revenues in FY19. Dixon’s revenue from consumer electronics segment (LED TV) in Q1FY20 jumped 129 per cent yoy to Rs. 510 crore.

Currently, the company is catering to 80 per cent of Xiaomi’s requirement of TVs, while Panasonic, which was its second-largest customer, has converted into ODM. Meanwhile, Dixon is expanding capacity in washing machine segment for top loading FAWM and mobiles.

Open cell LED TV panel is one of the most important components used in the manufacturing of LED TV. It must be noted that the open cell LED forms more than 65 per cent of the overall manufacturing cost of a TV.

Amid slowdown in the consumer spending this move of scrapping the import duty on open cell LED TV panel is expected to bring some relief in the television market worth Rs. 22,000 crore at least in near term.