Dixon Technologies Plunges 35% on Client Volume Collapse
Overview
Dixon Technologies shares have plummeted 35% over three months, hitting multi-month lows. Brokerage Phillip Capital cited a steep decline in volumes from key client Motorola, which constitutes over 45% of Dixon's revenue. Motorola's woes stem from intense competition and increased outsourcing, directly impacting Dixon's assembly business. Analyst sentiment is divided, but bearish views are gaining traction.
Dixon Technologies Ltd. shares have plunged 35% in the past three months, reaching their lowest point since June 2024 by Tuesday's closing. This steep decline is directly linked to significant volume drops from Motorola, a crucial client.
Client Woes Hit Revenues
Brokerage firm Phillip Capital highlighted a sharp fall in volumes from Motorola, which accounts for over 45% of Dixon's total revenue for fiscal year 2025. Reports indicate Motorola's volumes have slumped significantly over the last two quarters.
In the third quarter, Motorola experienced a 20% year-on-year decrease in volumes. This downturn is attributed to intense competition from rivals like Apple, which led to muted sales for the brand.
Increased Outsourcing Amplifies Impact
The situation worsened for Dixon Technologies as Motorola increasingly outsourced its production to Karbonn. During the quarter, Motorola shifted 23% of its volumes to Karbonn. This dual blow – declining domestic volumes for Motorola and increased outsourcing – directly translated to a 20% year-on-year volume decline for Dixon's assembly operations.
Bearish Outlook Prevails
Phillip Capital maintains a strong bearish stance on Dixon Technologies. The brokerage's price target of ₹9,085 suggests a potential 19% further downside. This target is the lowest among analysts and the only one below the ₹10,000 per share mark. Phillip Capital's thesis posits that the mobile phone assembly business lacks strong competitive moats, making it vulnerable to volume declines from increasing competition starting fiscal year 2027.
Earlier on Wednesday, Ambit Capital also adjusted its outlook, cutting its price target on Dixon Technologies to ₹11,275 from ₹11,868, while reiterating its "sell" rating.
Analyst Consensus Diverges
Despite the bearish sentiment from Phillip Capital and Ambit Capital, the broader analyst community remains largely optimistic. Out of 34 analysts covering Dixon Technologies, 26 recommend a "buy," two suggest "hold," and six advise "sell." The consensus price targets collectively imply a potential upside of 49.1% for the stock.
As of Wednesday morning, Dixon Technologies shares saw a slight rebound, trading up 1.2% at ₹11,375, after closing Tuesday at a level not seen since June 2024.
