Shares of Dixon Technologies (India) scaled a new all-time high on Monday amid a sustained rally, with the share price rising more than 12% in nine out of the last ten sessions. The shares of Dixon Technologies surged as much as 2.6% to hit a new record high of ₹7,045.25 early today after the company informed exchanges that its subsidiary, Padget Electronics, has signed a contract with Compal Smart Device India for manufacturing of mobile phones. The sentiment was further lifted after Dixon, engaged in manufacturing products in the consumer durables, lighting and mobile phones, launched a new factory at Dehradun, Uttarakhand, for manufacturing washing machines.

Dixon Technologies, one of the leading electronic manufacturing services (EMS) companies in India, has turned into multibagger in the last one year, rallying 162% from its 52-week low of ₹2,686.95 touched on February 24, 2023, driven by strong order book, led by mobiles and EMS segment. In the first nine of the current fiscal (9M FY24), the company has already reached a milestone of manufacturing 11 million smartphones and 26 million feature phones.

In an exchange filing on February 23, Dixon announced the launch of its new manufacturing unit in Uttarakhand, with an annual production capacity of 24 lakh washing machines. As per the company, the factory will generate employment opportunities for more than 1,000 people, while it is poised to stimulate local businesses, attract investments, and contribute significantly to the region's revenue.

“The new plant will enable us to deliver high-quality output to our customers both in the domestic as well as international markets at an accelerated rate. We are very proud to have opened a future-oriented production facility here in Dehradun,” says Sunil Vachani, Executive Chairman at Dixon Technologies.

In a separate filing on February 23, Dixon said that its wholly owned subsidiary - Padget Electronics has entered into a contract manufacturing agreement with Compal for the manufacturing of mobile phones. As per the deal, Padget Electronics will manufacture mobile phones for Compal and its designated customers.

“This association will give a strong impetus to India’s manufacturing competitiveness. Compal is one of the world’s leading manufacturers of notebook, PCs, smart devices, data center equipment and LCD products with world class R&D, manufacturing and supply chain management. We are ecstatic and encouraged by the trust they have reposed on Dixon group for the proposed association and believe that this association will leverage our excellence, superior execution track record and it represents a major milestone in Indian government’s “Make in India” initiative,” said Atul B. Lall, Vice Chairman & Managing Director, Dixon Technologies.

For the October-December quarter of the current fiscal, Dixon posted a 86% growth in consolidated profit at ₹96.44 crore as compared to ₹51.91 crore a year earlier, aided by strong demand for technology gadgets and expansion of electronics manufacturing in India. Revenue from operations doubled to ₹4,818 crore in Q3 FY24 from ₹2,404.7 crore during the year-ago period, majorly led by a lower base but robust order book.

The growth in top line was backed by robust growth in the mobile & EMS segment, which grew by 251% YoY to ₹3,214 crore. The consumer electronics segment recorded a moderate growth of 8% YoY to ₹929 crore, while the home appliance division rose 18% YoY to ₹288 crore, driven by strong growth in the sales of semiautomatic washing machines. The revenue from security systems segment grew by 65% YoY to ₹200 crore in Q3 FY24.

On the other hand, the revenue of the lighting segment fell by 29% YoY to ₹187 crore, majorly due to the weakened consumer demand and competitive intensity.

According to an analyst at Axis Securities, Dixon Technologies has aggressively increased its capacity in the mobile segment which is substantially increasing the company’s revenue visibility but at the cost of margin erosion. The mobile segment contributes margins of 3.2%.

“The company is gradually expanding its product portfolio in other segments and increasing capacity for future prospects. Currently, the laptop market is predominantly import-driven. The company anticipates a shift towards local manufacturing, which could be a key driver, contributing to the company's growth, supported by the PLI scheme,” said Akshay Mokashe, analyst at Axis Securities, in a post Q3 report released on February 2, 2024.

Earlier this year, Dixon Technologies began production of smartphones for Chinese technology firm, Xiaomi India, at its new Noida factory. In September last year, its subsidiary Padget Electronics signed a deal with Chinese smartphone manufacturer Xiaomi for the manufacturing of smartphones and other related products at the Noida facility. The Noida facility is built across 2.7 lakh square feet and at an annual capacity of 25 million units, the new manufacturing plant represents a significant stride in India's efforts to bolster its footprint in local smartphone manufacturing.

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