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Buy Dixon Technologies, target price Rs 10,937: Emkay Global

Written by corres2

Emkay Global has given a buy rating to Dixon Technologies with a target price of Rs 10,937. The share price moved up by 0.64 per cent from its previous close of Rs 8723.75. The stock’s last traded price is Rs 8779.55.

Dixon Technologies (India) Ltd., incorporated in the year 1993, is a Mid Cap company (having a market cap of Rs 10187.62 Crore) operating in Consumer Durables sector.

For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 516.94 Crore, down 39.71 % from last quarter Sales of Rs 857.41 Crore and down -54.93 % from last year same quarter Sales of Rs 1146.92 Crore. The Company reported net profit after tax of Rs 1.60 Crore in latest quarter.

Investment Rationale
As the much-talked PLI scheme is now approved, now focus will be on customer wins and the achievement of potential revenue scale above the prescribed ceiling, along with margin guidance on a sustainable basis. For achieving volumes under the PLI scheme, Dixon is in talks with multiple brands and it will be announcing the names soon. Although the company will be de-risking (paying after receiving from the government) itself on incentive payout to customers, timely payouts from the government will be important as it is the key reason for brands to shift their production to India. Additionally, there could be cut throat competition among the applicants to win customers which could also potentially risk margin delivery.

Promoter/FII Holdings
Promoters held 36.1 per cent stake in the company as of June 30, 2020, while FIIs held 12.3 per cent, DIIs 21.9 per cent and public and others 29.7 per cent.

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