Dixon shares hit all-time high on deal with vivo to setup new mfg joint venture

Extending gaining streak for the fifth straight session on Monday, shares of Dixon Technologies touched fresh all-time high after it signed a deal with Chinese smartphone manufacturer vivo. The company has signed an agreement with vivo India for setting up a new manufacturing joint venture to undertake original equipment manufacturer (OEM) business of electronic devices, including smartphones.

Boosted by the development, Dixon Technologies shares rose as much as 3.9% to hit a new record high of ₹18,658.50 on the BSE, while the market capitalisation inched close to ₹1.12 lakh crore. Early today, the stock opened higher for the fifth straight session at ₹18,300, up 1.9% over Friday’s closing level of ₹17,957.75.

The stock has seen significant rally in the calendar year, with the share price more than tripled from its 52-week low of ₹5,785 touched on January 24, 2024. In the last six month, the counter has risen 62%, while it gained over 26% in the past one month.

In an exchange filing on Sunday, Dixon Technologies said that it inked a binding term sheet with vivo Mobile India Private Limited to form a joint venture for smartphones manufacturing in India, subject to requisite approval and certain conditions.

As per the agreement, Dixon will hold majority stake of 51% in the joint venture entity, while vivo India will own 49% shares in the firm. “Neither Dixon nor Vivo India will have any stake in each other,” the company said in the exchange filing.

The release noted that both the parties will agree on an optimum structure and the relevant terms and conditions to be set out in the definitive agreements. “The transaction will be subject to execution of such definitive agreements, completion of customary conditions precedent and receipt of applicable regulatory approvals including as required under the foreign exchange control laws of India.”

“This partnership further strengthens our strong foothold in the android smartphone ecosystem in India. There is immense potential to further build on shared capabilities together in times to come, to deliver sustainable growth for the proposed venture,” says Atul B. Lall, Vice Chairman and Managing Director of Dixon. 

Jerome Chen, CEO of vivo India, said, “The proposed joint venture will undertake part of Vivo's OEM orders of smartphones in India, and can also engage in OEM business of various electronic products of other brands. This partnership will effectively complement the current manufacturing operations of vivo India.”

Dixon Technologies is one of the largest home grown design-focused and solutions company engaged in manufacturing products in the consumer durables, lighting and mobile phones markets in India. Earlier this month, its subsidiary, Padget Electronics, unveiled plans to start mass production of Google Pixel smartphones at its Noida plant. In recent quarters, Dixon has made significant client additions to its mobile business such as Jio and Nokia in (Mar’23), Itel (Jun’23), Xiaomi (Sept’23) and Realme (started production in May’24).

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