Dixon Tech shares will soar
Friday was a great day for Dixon Technologies in the stock market. A strong rise of 4 percent was seen in the company’s shares on Bombay Stock Exchange (BSE) and the price jumped to the level of Rs 14,027. There is a big reason behind this sudden rise. In fact, the long pending government approval has been received for a joint-venture (JV) between Chinese smartphone manufacturer Vivo (Vivo Mobile India) and Dixon. This news created such enthusiasm in the market that leading brokerage firm Emkay has increased the target price of this stock to beyond Rs 15,000.
Share became rocket
There was a rumor in the market for some time regarding the partnership between Dixon and Vivo. In December 2024, both the companies had signed an important agreement (Binding Term Sheet). In this new partnership, Dixon Technologies will have the upper hand, which will have 51 percent share capital, while Vivo India’s stake will be 49 percent. Now that this 51:49 joint-venture has received ‘PN3’ (Press Note 3) approval from the government, the confidence of investors on this stock has also deepened. Due to this much-awaited approval, the stock soared high on Friday.
What will investors get from the deal with Vivo?
Whenever there is a big deal in the corporate world, it has a direct impact on the company’s earnings and ultimately the profits of the investors. According to the latest note of brokerage firm Emkay, this joint-venture will increase the pace of Dixon’s smartphone manufacturing manifold. While earlier it was estimated that there would not be any significant increase in Dixon’s smartphone volume, now according to the new estimate, in the financial year 2027 and 2028, the company will produce 65 lakh (6.5mn) and 1.8 crore (18mn) smartphones for Vivo respectively. Due to this huge increase in production, the company’s earnings per share (EPS) is also expected to increase significantly by 14 to 17 percent during the financial year 2027-28. The company’s profits will increase rapidly, which will directly benefit the shareholders.
Brokerage firm sees target of Rs 15,200
Dixon is already the uncrowned king of the Indian smartphone manufacturing sector. It has a major share of 45 to 50 percent in the total manufacturing capacity of the country. At the same time, Vivo also holds a strong share of 18 to 21 percent in the Indian smartphone market for the last six quarters. With the coming together of these two giants, Dixon’s position in the market has become even more invincible. The company’s financial position is extremely strong; Excellent cash flow, return ratio of more than 25 percent and its performance has been strong even in difficult economic conditions. In view of these strong figures, brokerage firm Emkay has maintained ‘BUY’ rating on Dixon’s shares. Also, the target price has been increased by 22 percent from Rs 12,500 to Rs 15,200.
Disclaimer: This article is for information only and should not be considered as investment advice in any way. TV9 Bharatvarsha advises its readers and viewers to consult their financial advisors before taking any money-related decisions.
