Systematix

Institutional Equities

Dixon Technologies 27 October 2023

Strong 2Q; Mobile, IT hardware to drive robust growth

RESULT UPDATE DIXON’s strong 2Q (revenue/EBITDA/PAT up 28%/37%/47% YoY) was led by the
Sector: EMS Rating: BUY mobile segment (revenue up 77% YoY and 57% QoQ). Net WC cycle (-6 days)
CMP: Rs 5,300 Target Price: 6,256
remained under tight control. Mobile segment is back on track; its revenue
contribution is expected to rise to 60-70% in few years from 50% currently.
Stock Info Consumer Electronics segment is expected to revive in 3Q due to festival shift. The
Sensex/Nifty 63,148/18,857 IT hardware can be a whooping Rs 480bn revenue opportunity in 6 years at a Rs
Bloomberg DIXON IN 2.5bn capex; a large global brand is likely to be onboarded soon after DIXON’s PLI
Equity shares (mn) 59.6 approval from the government. DIXON will continue to explore high growth
52-wk High/Low 5,514/2,642 segments without compromising on consolidated margins or RoCE. Capex intensity
Face value Rs 2
will reduce after Rs 5bn planned in FY24E. On better-than-expected traction in
M-Cap Rs 316bn/ USD 3.8bn
3-m Avg volume USD 35.5mn
mobile segment and likely large revenues from IT hardware, we upgrade our
revenue/PAT estimates for FY24 by 24%/13% and for FY25 by 23%/8%,
Financial Snapshot (Rs mn) respectively. We now estimate 37%/44% CAGR in revenue/PAT over FY23-35E with
Y/E Mar FY23 FY24E FY25E broadly stable EBITDA margin of 4.1% and strong ~25%/35% RoE/RoCE. Maintain
Net sales 1,21,920 1,88,698 2,28,074 BUY with a revised Rs 6,256 TP (earlier Rs 5,793), based on 70x FY25E P/E.
EBITDA 5,128 7,800 9,427
OPM (%) 4.2 4.1 4.1
2Q - strong traction in mobiles drove healthy results: Consolidated revenue/EBITDA
PAT (adj.) 2,551 4,338 5,322 /PAT grew 28%/37%/47% YoY and 51%/51%/69% QoQ, driven mainly by the mobile
EPS (adj.) (Rs) 42.8 72.9 89.4 segment (up 77% YoY and 57% QoQ). Gross margin expanded 100bps YoY (flattish
PE (x) 123.7 72.7 59.3 QoQ) at 9.6%. Fast growth in the low margin mobile segment (3.3%) restricted expansion
P/B (x) 24.6 18.5 14.2 in EBITDA margin at 4% (up 27bps YoY, flattish QoQ). ODM mix in the consumer
EV/EBITDA (x) 61.4 40.3 32.9 electronics segment rose to 33%. Net WC cycle (-6 days) remained under control.
RoE (%) 19.9 25.4 24.0 Segment performance in 2QFY24: Consumer Electronics (revenue down 4% YoY, up
RoCE (%) 27.2 37.6 35.4 63% QoQ; EBITDA margin 3.4%, up 55bps YoY); Lighting (revenue down 38% YoY and
Net-D/E (x) (0.0) 0.0 0.0
18% QoQ; EBITDA margin 7.2%, down 101bps YoY); Home Appliances (revenue flat
Shareholding Pattern (%) YoY and up 41% QoQ; EBITDA margin 11.5%, up 253bps YoY); Mobile & EMS (revenue
Sep'23 Jun'23 Mar'23 up 77% YoY and 57% QoQ; EBITDA margin 3.3%, up 65bps YoY); Security Systems
Promoter 33.8 34.0 34.1 (revenue up 18% YoY and 23% QoQ; EBITDA margin 1.4%, down 161bps YoY)
- Pledged
Guidance and growth drivers: 1) Mobile segment is having strong order book
FII 15.7 15.0 12.0
position. Its revenue contribution to total is expected to see a sharp uptick to 60-70%
DII 27.4 24.6 23.8
Others 23.1 26.4 30.1 in a few years from 50% currently. 2) Consumer electronics revenue is expected to
see demand uptick in 3Q due to festival shift from 2Q. 3) Dixon received PLI of Rs
Stock Performance (1-year) 118mn in 2Q and Rs 170mn in 1H across 4 PLIs and Rs 360mn disbursal is expected in
5,750 FY24. 4) In IT hardware PLI, it aims for a whooping Rs 480bn revenue in 6 years on a
4,813 Rs 2.5bn capex. A large global brand is likely to be onboarded soon after Dixon
3,875
receives PLI approval from the government. 5) Dixon will explore its entry into high
growth and sunrise segments without compromising on consolidated margins or
2,938
RoCE. 6) Gradual increase in value addition across segments will drive margins. 7)
2,000 Capex intensity will reduce from FY25 onward after Rs 5bn planned in FY24E. 8)
Jan-23

Jul-23
Oct-22

Apr-23

Oct-23
Dec-22

Mar-23

Sep-23
Jun-23

Exports revenue to expected to double YoY to over Rs 20bn in FY24E. (concall KTAs)
Robust financial outlook; maintain BUY with Rs 6,256 TP: On better-than-expected
DIXON Sensex
traction in mobile segment and likely large revenues from IT hardware, we upgraded
our revenue/PAT estimates for FY24 by 24%/13% and for FY25 by 23%/8%,
Ashish Poddar respectively. We now estimate 37%/44% CAGR in revenue/PAT over FY23-35E with
[email protected] broadly stable EBITDA margin of 4.1% and ~25%/35% RoE/RoCE. New customer
+91 22 6704 8039
addition, strong traction in mobile and other existing segments and fast ramp up in
Pranay Shah new segments (telecom hardware, laptops, refrigerators) would drive this growth.
[email protected]
Maintain BUY with a revised Rs 6,256 TP. Key risk: 1. Demand slowdown in key user
Kalash Jain
segments (mobile, lighting etc.), 2. Loss of key customer’s market share.
[email protected]

Investors are advised to refer disclosures made at the end of the research report.

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27 October 2023 Dixon Technologies

2QFY24 concall key highlights and outlook

2QFY24 – strong traction in mobiles drove healthy results
• Revenue/EBITDA/PAT up 28%/37%/47% YoY and 51%/51%/69% QoQ
• Gross margin 9.6% and EBITDA margin 4% was flattish QoQ
• Rise in ODM mix to 33% in Consumer Electronics
• WC cycle (-6 days) remains under control

Business dynamics & Outlook

• Consumer electronics revenue to see uptick in 3Q due to festival shift
• PLI: received Rs 118mn in 2Q and Rs 170mn in 1H across 4 PLIs; expect Rs 360mn
disbursal in FY24
• Mobile business is likely to see sharp uptick with its revenue contribution to total
increasing to 60-70% from 50% currently
• IT Hardware PLI: aims Rs 480bn revenue in 6 years on a Rs 2.5bn capex
• To explore new high growth or sunrise segments without compromising on
consolidated margins or RoCE
• Gradual increase in value addition will drive margins
• Capex intensity is likely to reduce from FY25 after Rs 5bn capex planned in FY24E
• Exports revenue to expand to Rs 25bn in 2-3 years from Rs 10bn in FY23

Consumer Electronics [2Q revenue down 4% YoY, up 63% QoQ; EBITDA margin
3.4%, up 55bps YoY]
• Revenue came in soft due to soft demand and shift in festival to 3Q
• Operating leverage (25bps), backward integration (30bps) aided to margins
• Added capacity in injection mouldings business

Lighting [2Q revenue down 38% YoY and 18% QoQ; EBITDA margin 7.2%, down
101bps YoY]
• Revenue got impacted due to soft demand, high competition and ~30% price
correction due to industry shifting to more efficient DoB technology
• Plans to expand in professional lighting segment from 4Q
• Healthy traction is seen in exports (Germany, UK etc.)

Home Appliances [2Q revenue flat YoY and up 41% QoQ; EBITDA margin 11.5%, up
253bps YoY]
• Shift in festivals to 3Q impacted volumes; should recover in 3Q
• Managed to pass on raw material cost inflation
• Semi-automatic Washing Machines volume in 1H up 14% YoY (1.7mn vs 1.4mn);
improved traction with Bosch, Voltbek etc.

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27 October 2023 Dixon Technologies
Mobile & EMS [2Q revenue up 77% YoY and 57% QoQ; EBITDA margin 3.3%, up
65bps YoY]
• Mobile segment’s 2Q revenue was strong at Rs 36bn
• Large order book from Motorola, Bharat Jio, Xiaomi, Itel
• Xiaomi - trial completed; supply to start from 4Q or 1Q
• In talks with other large global brands for onboarding
• Currently high demand for domestic market; will boost exports too (including
Nokia)
• Large capex is already executed to meet high demand for Mobile
• Healthy traction in Hearables & Wearable revenue (Rs 3.85bn)
• IT & Hardware revenue (2Q Rs 520mn; 1H Rs 1.4bn)

Security Systems [2Q revenue up 18% YoY and 23% QoQ; EBITDA margin 1.4%,
down 161bps YoY]
• New facility is likely to be operational in 1QFY25

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27 October 2023 Dixon Technologies
Exhibit 1: Dixon (Consolidated) – Quarterly results
(Rs mn) 2QFY23 3QFY23 4QFY23 1QFY24 2QFY24 YoY (%) QoQ (%) 1HFY24 1HFY23 YoY (%)
Total Income 38,668 24,047 30,655 32,715 49,432 28 51 82,147 67,218 22
Raw material costs 35,346 21,391 27,519 29,558 44,691 26 51 74,249 61,298 21
Employee costs 702 637 630 685 953 36 39 1,637 1,250 31
Other expenses 1,168 908 943 1,154 1,799 54 56 2,953 2,218 33
EBITDA 1,452 1,112 1,563 1,319 1,989 37 51 3,308 2,453 35
Depreciation 291 290 325 337 364 25 8 702 532 32
Finance costs 158 152 151 140 171 8 22 311 303 3
Other income 6 28 18 29 7 31 (75) 36 10 268
PBT 1,008 698 1,105 870 1,461 45 68 2,331 1,628 43
Tax 231 186 315 229 352 52 54 580 396 46
PAT 771 519 806 672 1,134 47 69 1,806 1,226 47
EPS (Rs) 13.0 8.7 13.5 11.3 19.0 46 69 30.3 20.6 47
As % Total Income YoY (bps) QoQ (bps) YoY (bps)
Gross margin 8.6 11.0 10.2 9.7 9.6 100 (6) 9.6 8.8 81
Employee costs 1.8 2.6 2.1 2.1 1.9 11 (17) 2.0 1.9 13
Other expenses 3.0 3.8 3.1 3.5 3.6 62 11 3.6 3.3 30
EBITDA margin 3.8 4.6 5.1 4.0 4.0 27 (1) 4.0 3.6 38
Depreciation 0.8 1.2 1.1 1.0 0.7 (2) (29) 0.9 0.8 6
EBIT margin 3.0 3.4 4.0 3.0 3.3 29 29 3.2 2.9 31
Finance costs 0.4 0.6 0.5 0.4 0.3 (6) (8) 0.4 0.5 (7)
Other income 0.0 0.1 0.1 0.1 0.0 0 (7) 0.0 0.0 3
PBT 2.6 2.9 3.6 2.7 3.0 35 30 2.8 2.4 41
Effective tax rate 22.9 26.6 28.5 26.3 24.1 118 (218) 24.9 24.3 56
PAT 2.0 2.1 2.6 2.0 2.2 23 28 2.1 1.8 30
Segment Revenues YoY (%) QoQ (%) YoY (%)
Consumer Electronics 15,007 8,640 9,810 8,820 14,400 (4) 63 23,220 24,329 (5)
Lighting 2,904 2,630 2,700 2,220 1,810 (38) (18) 4,030 5,216 (23)
Home Appliances 3,629 2,440 2,810 2,590 3,640 0 41 6,230 6,185 1
Mobile & EMS 15,944 9,150 14,100 17,950 28,190 77 57 46,140 28,993 59
Security Systems 1,183 1,184 1,240 1,140 1,400 18 23 2,540 2,494 2
Segment EBITDA (%) YoY (bps) QoQ (bps) YoY (bps)
Consumer Electronics 2.9 3.0 3.8 3.4 3.4 55 0 3.4 2.8 62
Lighting 8.2 9.1 9.6 8.6 7.2 (101) (138) 7.9 7.8 18
Home Appliances 9.0 10.2 11.0 10.8 11.5 253 73 11.2 8.6 261
Mobile & EMS 2.7 3.6 4.2 3.0 3.3 65 35 3.2 2.6 57
Security Systems 3.0 2.0 2.9 1.3 1.4 (161) 11 1.4 3.5 (215)
Blended 3.8 4.6 5.1 4.0 4.0 4.0 4.2
ODM share (%)
Consumer Electronics 25 22 38 29 33
Lighting Products 93 89 88 90 90
Working capital (days)
Inventory 27 38 27 32 29
Debtors 45 52 48 44 38
Creditors 72 89 77 81 72
Cash conversion cycle - 1 (2) (6) (6)
Source: Company, Systematix Institutional Research

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27 October 2023 Dixon Technologies

Quarterly performance
Exhibit 2: Total Income growth trend Exhibit 3: Revenue mix trend
(Rs bn) (%) 100%
6 8 9 9 10 9 8 7 4
63 71 100 14 14 10 8 8 11 9 7
53 75% 29
41 40 38 27
47 28 50 34 33 39 36 32
4 15 50% 46
53
32 (22) 0 25% 46 46 55 57
44 41 38
21 31

24.0
28.0

30.7

29.5

28.6

38.7

30.7

32.7

49.4
16 (50) 0%

4QFY23
2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

1QFY24

2QFY24
0 (100)
3QFY23
2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

4QFY23

1QFY24

2QFY24
Mobile & EMS Consumer Electronics Lighting
Total Income YoY growth (RHS) Home Appliances Security Systems

Exhibit 4: Cost structure and margin trend Exhibit 5: Mobile & EMS - Revenue, margin trend
(%) (%) (Rs bn) (%)
93 91.6 8 30 4.2 5
91.1 91.4
90.8 90.9 5.1 3.5 3.6 3.3
92 4.6 90.4 6 3.2 3.0 3.0
3.8 4.0 90.3 23
2.5 2.7 4
90 3.9 3.3 3.4 4.0 3.5 3.8 89.8 4.0 4
3.5 15 3
3.1 3.3 3.7 3.0 3.1 3.6
89 2

12.9

13.0

15.9

14.1

18.0

28.2
89.02.6 8 1

6.0

9.4

9.2
1.9 1.7 … 1.9 1.8 2.1 2.1 1.9
87 0
0 0
2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

4QFY22
2QFY22

3QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24
Raw material Employee (RHS)
Others (RHS) EBITDA margin (RHS) Total Income EBITDA Margin (RHS)

Exhibit 6: Consumer Electronics - Revenue, margin trend Exhibit 7: Home Appliances - Revenue, margin trend
(Rs bn) (%) (Rs mn) (%)
3.8 11.5
20 3.4 3.4 4 4,000 11.0 10.8 13
3.0 10.2
2.8 2.7 2.9 9.0
15 2.4 3 8.5 7.9 8.1
2.2 3,000 10
6.7
10 2 2,000 7
2,240

1,801

2,341

2,556

3,629

2,440

2,810

2,590

3,640
14.9

14.1

10.1

15.0

14.4

5 1 1,000 3
8.6
9.3

9.8

8.8

0 0 0 0
2QFY22

3QFY23
3QFY22

4QFY22

1QFY23

2QFY23

4QFY23

1QFY24

2QFY24

2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24
Total Income EBITDA Margin (RHS) Total Income EBITDA Margin (RHS)

Exhibit 8: Lighting - Revenue, margin trend Exhibit 9: Security Systems - Revenue, margin trend
(Rs mn) (%) (Rs mn) (%)
5,000 15 1,500 4.1 4.2 4.0 5
9.6 3.4
9.1 3.0
1,400

3,750 8.0 8.2 8.6 11 1,125 2.9 4

6.5 7.1 7.2 7.2
1,140

2.0
2,500 8 750 3
3,957

3,046

2,312

2,904

2,630

2,700

2,220

1,810

1,311
1,127

1,096

1,183

1,240
4,304

1,184

1,250 4 375 1
990

1.3 1.4
0 0 0 0
2QFY22

3QFY22

4QFY22

1QFY23

2QFY23

3QFY23

4QFY23

1QFY24

2QFY24

1QFY23

1QFY24
2QFY22

3QFY22

4QFY22

2QFY23

3QFY23

4QFY23

2QFY24

Total Income EBITDA Margin (RHS) Total Income EBITDA Margin (RHS)

Source: Company, Systematix Institutional Research

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27 October 2023 Dixon Technologies

Annual Performance
Exhibit 10: Revenue growth trend Exhibit 11: Gross, EBITDA and PAT margin trend
(Rs bn) (%) (%)
250 228.1 15 10
FY20-23 CAGR: 40% 12.3
FY23-25E CAGR: 37%
200 188.7 10.5
11 9.6 9.5 9.5 8
8.6
150 8 5
121.9
107.0 5.1
4.4 4.2 4.1 4.1
100 4 3.5 3
64.5 2.7 2.5 2.3 2.3
44.0 1.8 2.1
50
0 0
FY20 FY21 FY22 FY23 FY24E FY25E
0
Gross margin EBITDA margin (RHS) PAT margin (RHS)
FY20 FY21 FY22 FY23 FY24E FY25E

Exhibit 12: PAT growth trend Exhibit 13: NWC cycle trend
(Rs bn) (%) (Days)
6.0 FY20-23 CAGR: 29% 4 120
FY23-25E CAGR: 44%

97
4.5 2.7 3

79
90

78

73
73
2.5

73
2.3 2.3
2.1
62

51
1.8 51
51
3.0 2 60
46
43

42
41

39

29
29
29
1.5 1 30

7
7
7
7
7
6
1.2 1.6 1.9 2.6 4.3 5.3
0
0.0 0
Debtor Days Inventory Days Creditor Days Net-WC Days
FY20 FY21 FY22 FY23 FY24E FY25E
PAT PAT margin (RHS) FY20 FY21 FY22 FY23 FY24E FY25E

Exhibit 14: RoIC, RoE trend Exhibit 15: Net debt/equity trend
(%) (x)
48 0.50
42
37 38 0.28
39 35
0.25
32 0.12
28 0.05
29 0.01
(0.03) (0.04)
0.00
25
20 24
22 22
19 20
(0.25)
10
FY20 FY21 FY22 FY23 FY24E FY25E
(0.50)
ROE ROIC
FY20 FY21 FY22 FY23 FY24E FY25E

Source: Company, Systematix Institutional Research

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27 October 2023 Dixon Technologies
Exhibit 16: Revenue mix trend Exhibit 17: Consumer Electronics - Revenue, margin trend
(Rs bn) (%)
100% 5 3 4 4 3 3
9 5 4 80 10
17 12 8 8
9 FY20-23 CAGR: 27%
26 7
75% 7 FY23-25E CAGR: 20% 61.5
28 27
9 60 51.7 53.5 8
35
50% 48 42.8
38.6
60 40 5
48
56 58 21.1
25%
43
29 20 3.5 3.6 3
3.1
12 13 2.4 2.7 2.4
0%
FY20 FY21 FY22 FY23 FY24E FY25E 0 0
Mobile & EMS Consumer Electronics Home Appliances FY20 FY21 FY22 FY23 FY24E FY25E

Lighting Security Systems Revenue EBITDA margin (RHS)

Exhibit 18: Lighting - Revenue, margin trend Exhibit 19: Home Appliances - Revenue, margin trend
(Rs bn) (%) (Rs bn) (%)
20 20 20 20
FY20-23 CAGR: -3% FY20-23 CAGR: 42%
FY23-25E CAGR: -3% FY23-25E CAGR: 23%
15 12.8 15 15 15
11.4 11.6 11.4 11.4
11.0 10.6
9.8 9.2 9.5
10 8.6 10 10 7.6 10

8.6 8.8 8.6

5 7.5 7.6 5 5 5
6.9

4.0 4.3 7.1 11.4 14.8 17.4

0 0 0 0
FY20 FY21 FY22 FY23 FY24E FY25E FY20 FY21 FY22 FY23 FY24E FY25E
Revenue EBITDA margin (RHS) Revenue EBITDA margin (RHS)

Exhibit 20: Mobile & EMS - Revenue, margin trend Exhibit 21: Security System - Revenue, margin trend
(Rs bn) (%) (Rs bn) (%)
150 8 10.0 6
FY20-23 CAGR: 113% FY20-23 CAGR: 31%
FY23-25E CAGR: 60% FY23-25E CAGR: 13%
113 6 7.5 3.8 5
4.7 3.3
2.8 3.0
3.6 3.3 3.3
75 3.1 3.2 4 5.0 3

1.6 1.8
38 2 2.5 2

5.4 8.4 31.4 52.2 106.4 133.1 2.2 2.2 4.0 4.9 5.4 6.3
0 0 0.0 0
FY20 FY21 FY22 FY23 FY24E FY25E FY20 FY21 FY22 FY23 FY24E FY25E
Revenue EBITDA margin (RHS) Revenue EBITDA margin (RHS)

Source: Company, Systematix Institutional Research

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27 October 2023 Dixon Technologies

Valuation and View

DIXON is India’s largest home-grown diversified and fully-integrated EMS player. The
company commenced operations in 1993 with colour TVs, and now has a wide range
of product offerings in several verticals such as consumer electronics (mobile
phones, CCTV, etc.), lighting products and home appliances (LED TV, washing
machine, refrigeration, etc). It is also a leading ODM of lighting products, LED TVs and
semi-automatic washing machines in India. Motorola, Xiaomi and Samsung are its
largest customers.
On better-than-expected traction in mobile segment and likely large revenues from
IT hardware, we upgrade our revenue/PAT estimates for FY24 by 24%/13% and for
FY25 by 23%/8%, respectively. We now estimate 37%/44% CAGR in revenue/PAT
over FY23-35E with broadly stable EBITDA margin of 4.1% and ~25%/35% RoE/RoCE.
New customer addition, strong traction in mobile and other existing segments and
fast ramp up in new segments (telecom hardware, laptops, refrigerators) would drive
this growth.
DIXON’s scrip has been volatile in last 2 years due to lacklustre performance vs
estimates, especially in the Mobile segment. We expect growth momentum to
accelerate on demand recovery and new customer onboarding. Maintain BUY with a
revised Rs 6,256 TP. Key risk: 1. Demand slowdown in key user segments (mobile,
lighting etc.), 2. Loss in key customer’s market share.
Exhibit 22: Change in estimates
Old estimates New estimates % Var
(Rs mn)
FY24 FY25 FY24 FY25 FY24 FY25
Total Income 1,52,667 1,85,858 1,88,698 2,28,074 24 23
EBITDA 6,680 8,300 7,800 9,427 17 14
EBITDA margin (%) 4.4 4.5 4.1 4.1
PAT 3,850 4,928 4,338 5,322 13 8
EPS 64.6 82.8 72.9 89.4 13 8
Source: Systematix Institutional Research

Exhibit 23: P/E band – 1-year-forward and standard deviation

160

120
+1 SD: 101
80
Mean: 64

40
-1 SD: 27

0
Jun-20
Dec-19
Oct-18

Oct-23
Feb-22

Sep-22
May-19

Aug-21
Jan-21

Mar-23

P/E Mean +1 SD -1 SD
Source: BSE, Company, Systematix Institutional Research

Key Risks
• Demand slowdown in key user segments (mobile, lighting, etc.)
• Loss in key customer’s market share

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27 October 2023 Dixon Technologies

FINANCIALS (CONSOLIDATED)
Profit & Loss Statement Balance Sheet
YE: Mar (Rs mn) FY21 FY22 FY23 FY24E FY25E YE: Mar (Rs mn) FY21 FY22 FY23 FY24E FY25E
Net revenues (Rs mn) 64,482 1,06,971 1,21,920 1,88,698 2,28,074 Share capital 117 119 119 119 119
Growth (%) 47 66 14 55 21 Net worth 7,373 9,968 12,849 17,068 22,212
Direct costs 57,697 97,792 1,10,207 1,70,685 2,06,303 Total debt 1,561 4,580 1,826 1,926 2,026
Gross Margin (%) 10.5 8.6 9.6 9.5 9.5 Minority interest - 6 (3) (3) (3)
SG&A 3,919 5,387 6,585 10,213 12,344 DT Liability/(Asset) 184 201 224 213 202
EBITDA 2,866 3,791 5,128 7,800 9,427 Capital Employed 9,118 14,754 14,897 19,205 24,437
EBITDA margins (%) 4.4 3.5 4.2 4.1 4.1 Net tangible assets 5,381 9,542 11,909 15,464 16,706
- Depreciation 437 840 1,146 1,445 1,758 Net Intangible assets 122 494 528 528 528
Other income 16 38 56 50 61 Goodwill - - - - -
Interest Exp 274 442 606 654 608 CWIP 724 220 1,197 1,207 1,217
PBT 2,170 2,548 3,432 5,751 7,122 Investments (Strategic) - - - - -
Effective tax rate (%) 26.4 25.3 26.1 24.8 25.5 Investments (Financial) 953 1,410 442 1,942 5,442
+ Associates/(Minorities) 1 2 3 3 3 Current Assets 20,589 29,282 30,428 45,260 54,084
Net Income 1,598 1,903 2,551 4,338 5,322 Cash 689 1,823 2,292 1,142 1,727
Adjusted income 1,598 1,903 2,551 4,338 5,322 Current Liabilities 19,339 28,017 31,898 46,337 55,266
WANS 59 59 60 60 60 Working capital 1,250 1,265 (1,470) (1,077) (1,182)
FDEPS (Rs/share) 27.3 32.1 42.8 72.9 89.4 Capital Deployed 9,118 14,754 14,897 19,205 24,437
FDEPS growth (%) 31 17 34 70 23 Contingent Liabilities 500 523 505

Cash Flow Ratios @ Rs 5,300

YE: Mar (Rs mn) FY21 FY22 FY23 FY24E FY25E YE: Mar FY21 FY22 FY23 FY24E FY25E
EBIT (incl. other income) 2,556 3,069 4,167 6,354 7,670 P/E (x) 194.2 165.3 123.7 72.7 59.3
Non-cash items 437 840 1,146 1,445 1,758 EV/EBITDA (x) 108.3 83.3 61.4 40.3 32.9
OCF before WC changes 2,993 3,909 5,314 7,800 9,427 EV/sales (x) 4.8 3.0 2.6 1.7 1.4
Incr./(decr.) in WC 743 641 (2,764) 413 (85) P/B (x) 42.1 31.6 24.6 18.5 14.2
Others including taxes 549 540 820 1,404 1,791 RoE (%) 21.7 19.1 19.9 25.4 24.0
Operating cash-flow 1,701 2,728 7,258 5,983 7,721 RoCE (%) 31.5 25.0 27.2 37.6 35.4
Capex 1,680 4,174 4,502 5,010 3,010 ROIC 35.3 27.9 31.5 41.6 37.7
Free cash-flow 22 (1,446) 2,755 973 4,711 DPS (Rs per share) 1.0 2.0 3.0 2.0 3.0
Acquisitions Dividend yield (%) 0.0 0.0 0.1 0.0 0.1
Dividend - 59 119 119 179 Dividend payout (%) 3.7 6.2 7.0 2.7 3.4
Equity raised 269 642 336 - - Net debt/equity (x) 0.1 0.3 (0.0) 0.0 0.0
Debt raised 688 3,026 (2,776) 100 100 Receivables (days) 62 46 51 51 51
Fin Investments 983 483 (926) 1,500 3,500 Inventory (days) 42 39 29 29 29
Misc. Items (CFI + CFF) 314 554 717 604 547 Payables (days) 97 79 73 73 73
Net cash-flow (318) 1,126 406 (1,150) 585 CFO:PAT (%) 106 143 285 138 145

Source: Company, Systematix Institutional Research

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27 October 2023 Dixon Technologies

Institutional Equities Team

Nikhil Khandelwal Managing Director +91-22-6704 8001 [email protected]
Equity Research
Analysts Industry Sectors Desk-Phone E-mail
Dhananjay Sinha Co Head of Equities & Head of Research - Strategy & Economics +91-22-6704 8095 [email protected]
Ashish Poddar Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8039 [email protected]
Himanshu Nayyar Consumer Staples & Discretionary +91-22-6704 8079 [email protected]
Manjith Nair Banking, Insurance +91-22-6704 8065 [email protected]
Pradeep Agrawal NBFCs & Diversified Financials +91-22-6704 8024 [email protected]
Pratik Tholiya Specialty & Agro Chem, Fertilisers, Sugar, Textiles and Select Midcaps +91-22-6704 8028 [email protected]
Sameer Pardikar IT & ITES +91-22-6704 8041 [email protected]
Sudeep Anand Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8085 [email protected]
Vishal Manchanda Pharmaceuticals and Healthcare +91-22-6704 8064 [email protected]
Chetan Mahadik Consumer Staples & Discretionary +91-22-6704 8091 [email protected]
Devanshi Kamdar IT & ITES +91-22-6704 8098 [email protected]
Jennisa Popat Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8066 [email protected]
Kalash Jain Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8038 [email protected]
Nirali Chheda Banking, Insurance +91-22-6704 8019 [email protected]
Pashmi Chheda Banking, Insurance +91-22-6704 8063 [email protected]
Pranay Shah Consumer Durables, EMS, Building Materials, Small-Mid Caps +91-22-6704 8017 [email protected]
Pratik Oza Midcaps +91-22-6704 8036 [email protected]
Pravin Mule NBFCs & Diversified Financials +91-22-6704 8034 [email protected]
Prathmesh Kamath Oil & Gas, Logistics, Cement, Wagons +91-22-6704 8022 [email protected]
Purvi Mundhra Macro-Strategy +91-22-6704 8078 [email protected]
Rajesh Mudaliar Consumer Staples & Discretionary +91-22-6704 8084 [email protected]
Ronak Dhruv NBFCs & Diversified Financials +91-22-6704 8045 [email protected]
Shweta Dikshit Metals & Mining +91-22-6704 8042 [email protected]
Vivek Mane Pharmaceuticals and Healthcare +91-22-6704 8046 [email protected]
Yogeeta Rathod Midcaps +91-22-6704 8081 [email protected]
Equity Sales & Trading
Name Desk-Phone E-mail
Vipul Sanghvi Co Head of Equities & Head of Sales +91-22-6704 8062 [email protected]
Jignesh Desai Sales +91-22-6704 8068 [email protected]
Sidharth Agrawal Sales +91-22-6704 8090 [email protected]
Rahul Khandelwal Sales +91-22-6704 8003 [email protected]
Chintan Shah Sales +91-22-6704 8061 [email protected]
Pawan Sharma Director and Head - Sales Trading +91-22-6704 8067 [email protected]
Mukesh Chaturvedi Vice President and Co Head - Sales Trading +91-22-6704 8074 [email protected]
Vinod Bhuwad Sales Trading +91-22-6704 8051 [email protected]
Rashmi Solanki Sales Trading +91-22-6704 8097 [email protected]
Karan Damani Sales Trading +91-22-6704 8053 [email protected]
Vipul Chheda Dealer +91-22-6704 8087 [email protected]
Paras Shah Dealer +91-22-6704 8047 [email protected]
Rahul Singh Dealer +91-22-6704 8054 [email protected]
Corporate Access
Mrunal Pawar Vice President & Head Corporate Access +91-22-6704 8088 [email protected]
Darsha Hiwrale Associate Corporate Access +91-22-6704 8083 [email protected]
Production
Madhu Narayanan Editor +91-22-6704 8071 [email protected]
Mrunali Pagdhare Production +91-22-6704 8057 [email protected]
Vijayendra Achrekar Production +91-22-6704 8089 [email protected]
Operations
Sachin Malusare Vice President +91-22-6704 8055 [email protected]
Jignesh Mistry Manager +91-22-6704 8049 [email protected]
Sushant Chavan Manager +91-22-6704 8056 [email protected]

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27 October 2023 Dixon Technologies

DISCLOSURES/APPENDIX

I. ANALYST CERTIFICATION
I, Ashish Poddar, Pranay Shah, Kalash Jain, hereby certify that (1) views expressed in this research report accurately reflect my/our personal views about any or all of the subject
securities or issuers referred to in this research report, (2) no part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations or views
expressed in this research report by Systematix Shares and Stocks (India) Limited (SSSIL) or its group/associate companies, (3) reasonable care is taken to achieve and maintain
independence and objectivity in making any recommendations.

Disclosure of Interest Statement Update

Analyst holding in the stock No
Served as an officer, director or employee No

II. ISSUER SPECIFIC REGULATORY DISCLOSURES, unless specifically mentioned in point no. 9 below:

1. The research analyst(s), SSSIL, associates or relatives do not have any financial interest in the company(ies) covered in this report.

2. The research analyst(s), SSSIL, associates or relatives collectively do not hold more than 1% of the securities of the company(ies) covered in this report as of the end of the
month immediately preceding the distribution of the research report.

3. The research analyst(s), SSSIL, associates or relatives did not have any other material conflict of interest at the time of publication of this research report.
4. The research analyst, SSSIL and its associates have not received compensation for investment banking or merchant banking or brokerage services or any other products or
services from the company(ies) covered in this report in the past twelve months.
5. The research analyst, SSSIL or its associates have not managed or co-managed a private or public offering of securities for the company(ies) covered in this report in the previous
twelve months.
6. SSSIL or its associates have not received compensation or other benefits from the company(ies) covered in this report or from any third party in connection with this research
report.

7. The research analyst has not served as an officer, director or employee of the company(ies) covered in this research report.

8. The research analyst and SSSIL have not been engaged in market making activity for the company(ies) covered in this research report.

9. Details of SSSIL, research analyst and its associates pertaining to the companies covered in this research report:

Sr. Yes /
Particulars
No. No.
1 Whether compensation was received from the company(ies) covered in the research report in the past 12 months for investment banking transaction by SSSIL. No
2 Whether research analyst, SSSIL or its associates and relatives collectively hold more than 1% of the company(ies) covered in the research report. No
3 Whether compensation has been received by SSSIL or its associates from the company(ies) covered in the research report. No
Whether SSSIL or its affiliates have managed or co-managed a private or public offering of securities for the company(ies) covered in the research report in the
4 No
previous twelve months.
Whether research analyst, SSSIL or associates have received compensation for investment banking or merchant banking or brokerage services or any other
5 No
products or services from the company(ies) covered in the research report in the last twelve months.

10. There is no material disciplinary action taken by any regulatory authority that impacts the equity research analysis activities.

STOCK RATINGS
BUY (B): The stock's total return is expected to exceed 15% over the next 12 months.
HOLD (H): The stock's total return is expected to be within -15% to +15% over the next 12 months.
SELL (S): The stock's total return is expected to give negative returns of more than 15% over the next 12 months.
NOT RATED (NR): The analyst has no recommendation on the stock under review.

INDUSTRY VIEWS
ATTRACTIVE (AT): Fundamentals/valuations of the sector are expected to be attractive over the next 12-18 months.
NEUTRAL (NL): Fundamentals/valuations of the sector are expected to neither improve nor deteriorate over the next 12-18 months.
CAUTIOUS (CS): Fundamentals/valuations of the sector are expected to deteriorate over the next 12-18 months.

III. DISCLAIMER
The information and opinions contained herein have been compiled or arrived at based on the information obtained in good faith from sources believed to be reliable. Such information
has not been independently verified and no guaranty, representation of warranty, express or implied, is made as to its accuracy completeness or correctness.

This document is for information purposes only. This report is based on information that we consider reliable; we do not represent that it is accurate or complete and one should exercise
due caution while acting on it. Description of any company(ies) or its/their securities mentioned herein are not complete and this document is not and should not be construed as an
offer or solicitation of an offer to buy or sell any securities or other financial instruments. Past performance is not a guide for future performance, future returns are not guaranteed and
a loss of original capital may occur. All opinions, projections and estimates constitute the judgment of the author as on the date of the report and these, plus any other information
contained in the report, are subject to change without notice. Prices and availability of financial instruments are also subject to change without notice. This report is intended for
distribution to institutional investors.
This report is not directed to or intended for display, downloading, printing, reproducing or for distribution to or use by, any person or entity that is a citizen or resident or located in any
locality, state, country or other jurisdiction where such distribution, publication, reproduction, availability or use would be contrary to law or regulation or what would subject to SSSIL or
its affiliates to any registration or licensing requirement within such jurisdiction. If this report is inadvertently sent or has reached any individual in such country, especially USA, the same
may be ignored and brought to the attention of the sender. Neither this document nor any copy of it may be taken or transmitted into the United States (to U.S. persons), Canada, or
Japan or distributed, directly or indirectly, in the United States or Canada or distributed or redistributed in Japan or to any resident thereof. Any unauthorized use, duplication,

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27 October 2023 Dixon Technologies
redistribution or disclosure of this report including, but not limited to, redistribution by electronic mail, posting of the report on a website or page, and/or providing to a third party a link,
is prohibited by law and will result in prosecution. The information contained in the report is intended solely for the recipient and may not be further distributed by the recipient to any
third party.
SSSIL generally prohibits its analysts, persons reporting to analysts, and members of their households from maintaining a financial interest in the securities or derivatives of any
companies that the analysts cover. Additionally, SSSIL generally prohibits its analysts and persons reporting to analysts from serving as an officer, director, or advisory board member of
any companies that they cover. Our salespeople, traders, and other professionals or affiliates may provide oral or written market commentary or trading strategies to our clients that
reflect opinions that are contrary to the opinions expressed herein. Our proprietary trading and investing businesses may make investment decisions that are inconsistent with the
recommendations expressed herein. The views expressed in this research report reflect the personal views of the analyst(s) about the subject securities or issues and no part of the
compensation of the research analyst(s) was, is, or will be directly or indirectly related to the specific recommendations and views expressed by research analyst(s) in this report. The
compensation of the analyst who prepared this document is determined exclusively by SSSIL; however, compensation may relate to the revenues of the Systematix Group as a whole, of
which investment banking, sales and trading are a part. Research analysts and sales persons of SSSIL may provide important inputs to its affiliated company(ies).
Foreign currencies denominated securities, wherever mentioned, are subject to exchange rate fluctuations which could have an adverse effect on their value or price or the income
derived from them. In addition, investors in securities such as ADRs, the values of which are influenced by foreign currencies, effectively assume currency risk. SSSIL, its directors, analysts
or employees do not take any responsibility, financial or otherwise, of the losses or the damages sustained due to the investments made or any action taken on the basis of this report
including but not restricted to fluctuation in the prices of shares and bonds, changes in the currency rates, diminution in the NAVs, reduction in the dividend or income, etc.

SSSIL and its affiliates, officers, directors, and employees subject to the information given in the disclosures may: (a) from time to time, have long or short positions in, and buy or sell, the
securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation (financial interest)
or act as a market maker in the financial instruments of the company (ies) discussed herein or act as advisor or lender / borrower to such company (ies) or have other potential material
conflict of interest with respect to any recommendation and related information and opinions. The views expressed are those of the analyst and the company may or may not subscribe
to the views expressed therein.
SSSIL, its affiliates and any third party involved in, or related to, computing or compiling the information hereby expressly disclaim all warranties of originality, accuracy, completeness,
merchantability or fitness for a particular purpose with respect to any of this information. Without limiting any of the foregoing, in no event shall SSSIL, any of its affiliates or any third
party involved in, or related to, computing or compiling the information have any liability for any damages of any kind. The company accepts no liability whatsoever for the actions of
third parties. The report may provide the addresses of, or contain hyperlinks to, websites. Except to the extent to which the report refers to website material of the company, the
company has not reviewed the linked site. Accessing such website or following such link through the report or the website of the company shall be at your own risk and the company
shall have no liability arising out of, or in connection with, any such referenced website.
SSSIL will not be liable for any delay or any other interruption which may occur in presenting the data due to any technical glitch to present the data. In no event shall SSSIL be liable for
any damages, including without limitation, direct or indirect, special, incidental, or consequential damages, losses or expenses arising in connection with the data presented by SSSIL
through this presentation.

SSSIL or any of its other group companies or associates will not be responsible for any decisions taken on the basis of this report. Investors are advised to consult their investment
and tax consultants before taking any investment decisions based on this report.

Registration granted by SEBI to SSSIL and certification from NISM to the analyst in no way guarantee performance of SSSIL or to provide any assurance of returns to investors.

Systematix Shares and Stocks (India) Limited:

Registered and Corporate address: The Capital, A-wing, No. 603 – 606, 6th Floor, Plot No. C-70, G Block, Bandra Kurla Complex, Bandra (East), Mumbai – 400 051
Tel no. 022-66198000/40358000 Fax no. 022-66198029/40358029 Email id [email protected]. Visit us at: www.systematixgroup.in
Details of Compliance officer: Ms Nipa Savla, Compliance officer Tel no. 022-66198092/4035808092 Email id [email protected]
Details of Email id grievance redressal cell : [email protected]
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PMS SEBI Reg. No.: INP000002692 | Research Analyst SEBI Reg. No.: INH200000840 | AMFI : ARN - 64917

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