Dixon Technologies targets FY28 margin recovery as mobile and IT hardware scale
Dixon Technologies (India) Ltd.
BUY
₹11,000
₹12,580
₹15,900
44.55%
Investment View and Key Takeaways
Motilal Oswal’s October 31, 2026 results update on Dixon Technologies reiterates its BUY rating following better-than-expected 2QFY27 revenue and adjusted PAT performance. The broker believes Dixon is benefiting from market-share gains in mobile phones, healthy smartphone volumes and pricing, and a strong ramp-up in IT hardware and telecom.
Motilal Oswal expects FY28 to capture the full benefit of backward integration, higher volumes from the Vivo joint venture, exports and new client additions. It expects Mobile and EMS to contribute about 93 per cent of total revenue.
2QFY27 Financial Performance
Dixon reported consolidated 2QFY27 revenue of Rs 21,800 crore, up 47 per cent YoY and 6 per cent above Motilal Oswal’s estimate, driven by better-than-expected execution across segments. EBITDA increased 6 per cent YoY to around Rs 597 crore and was broadly in line with the broker’s estimate. However, EBITDA margin declined 110 basis points YoY to 2.7 per cent, compared with the estimate of 2.8 per cent. Adjusted PAT was above Motilal Oswal’s estimate.
| Metric | 2QFY27 | YoY change | Additional detail |
|---|---|---|---|
| Revenue | Rs 21,800 crore | 47% | 6% above Motilal Oswal’s estimate |
| EBITDA | Around Rs 597 crore | 6% | Broadly in line with estimate |
| EBITDA margin | 2.7% | Down 110 bps | Estimate: 2.8% |
| Adjusted PAT | Above estimate | — | Ahead of Motilal Oswal’s estimate |
For 1HFY27, revenue, EBITDA and PAT rose 35 per cent, 2 per cent and 8 per cent YoY respectively, while EBITDA margin declined 100 basis points YoY to 2.8 per cent. Operating cash flow was an outflow of Rs 280 crore versus an inflow of Rs 880 crore a year earlier, reflecting higher working-capital needs from inventory and receivables.
Mobile and EMS Growth
Mobile and EMS revenue rose 50 per cent YoY in 2QFY27. Dixon manufactured 9.7 million smartphones, up 29 per cent QoQ, and continued to gain share even as industry smartphone volumes declined 16 per cent YoY, according to Motilal Oswal.
Management retained its FY27 smartphone-volume guidance of 33 million to 34 million units, excluding the Vivo joint venture. Management expects Vivo joint-venture commercial production from 4QFY27, while Motilal Oswal expects its volume contribution to begin from that quarter.
| Smartphone volumes | FY27E | FY28E |
|---|---|---|
| Motilal Oswal estimate, including Vivo joint-venture volumes | 37.3 million units | 55 million units |
| Management guidance, excluding Vivo joint venture | 33 million to 34 million units | — |
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IT Hardware and Telecom Expansion
IT hardware and telecom are scaling rapidly. Their 2QFY27 revenues were Rs 2,160 crore and Rs 1,840 crore respectively.
Management targets IT hardware revenue of Rs 6,000 crore to Rs 6,500 crore in FY27 and Rs 15,000 crore to Rs 20,000 crore over the next couple of years. The 60:40 Inventec joint venture is expected to commence commercial operations in 4QFY27.
Management expects laptop and tablet volumes of 1.3 million to 1.4 million units in FY27 and 1.8 million to 2 million units in FY28. IT hardware margins are presently 2 per cent to 2.3 per cent, but localisation of 25 per cent to 30 per cent of the bill of materials could add 80 to 200 basis points over time.
The telecom portfolio is expanding to include microwave backhaul radios, optical platforms, industrial radios and network terminals. GemTech is expected to begin commercial production in FY28.
Consumer Electronics and Backward Integration
The report highlights weak demand and inflationary pressure in consumer electronics, refrigerators and lighting. Home appliances maintained healthy volume growth and hold a 33 per cent market share.
Segment margins were pressured by the expiry of PLI 1.0 from March 2026, higher raw-material and freight costs, and chip costs. Dixon’s display facility is expected to start trials in 4QFY27 and mass production in FY28, while the Qtech camera-module expansion remains on track.
Motilal Oswal has allowed for delays in display backward integration and expects margin recovery from FY28. It forecasts EBITDA margins of 2.9 per cent in FY27E, 3.6 per cent in FY28E and 4.4 per cent in FY29E.
Earnings Estimates and Valuation
Motilal Oswal raised FY27E and FY28E earnings estimates by 7 per cent and 2 per cent respectively, reflecting 1HFY27 performance and lower minority interest.
| Forecast metric | FY26 to FY29 forecast |
|---|---|
| Revenue CAGR | 29% |
| EBITDA CAGR | 36% |
| PAT CAGR | 39% |
The target price of Rs 15,900 is based on a two-year forward DCF valuation and was raised from Rs 15,400.
Key Risks
- Weaker-than-expected market growth
- Loss of key-client relationships
- Increased competition
- Limited bargaining power with clients
Disclaimer: This is a summary of a research report published by the broker/research house identified above. The views, recommendations, target prices and estimates are those of the respective broker and do not represent DSIJ investment advice. The summary may be AI-assisted, hence please refer to the original report for complete details, disclosures and risks.
