Jio set-top box maker Dixon Tech shares have doubled in less than 4 months— and there may be more
Dixon Technologieshas risen as much as 191% in the last 1 year and nearly 100% since coronavirus induced lockdown.
- The company makes popular electronic products like Television, Setup box, washing machine for the brand owners like Samsung, Toshiba, Nokia, LG, Reliance Jio and many more to name a few.
- The consumer electronics segment, which contributes around 45% of the company’s revenue saw a growth of 22% in the Q4.
It's showing no signs of stalling yet. In a report dated July 2, analysts at Axis Securities expected the stock to hit ₹6172 in the next one year. It's already surpassed that.
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The rapid growth is backed by orders from recently added clients Reliance Jio and
India-China tensions boosted its production
On the back of the India China standoff, the company saw a growing demand for ‘made in India’ products. Earlier, Samsung decided to expand its partnership with Dixon Technologies and led to further gains for the company. The company said it will bring down the number of TVs imported from its plants in other countries and manufacture almost 85-90% of the televisions locally to sell in India.
The consumer electronics segment, which contributes around 45% of the company’s revenue saw a growth of 22% in the Q4. While other businesses like lightning products, mobile phones, and security systems saw revenue decline during the quarter.
Dixon Technologies’s MD Atul Lall told
Strong customers addition helped in tough times
Dixon has regularly been acquiring new clients during the crisis. Fueled by PM Modi’s ‘Atma Nirbhar Bharat’ many companies are now looking to manufacture products in India, few of the new clients include Voltas Beko and Reliance Digital’s private label brands such as Kelvinator.
Advertisement“A key advantage for Dixon is its diversification across customers, products and product fungibility, which makes manufacturing flexible. When it is not making security systems, it can use that line to make set-top boxes or medical kits. Similarly, its largest OEM in TVs has a strong online sales model, which has helped inventory even during the lockdown,” said a
Production-linked incentive scheme for Dixon
Dixon is expected to be largely benefitted by the government’s production-linked incentive scheme for mobile manufacturing. The scheme offers incentives to boost domestic manufacturing of mobiles.
As per government norms sub $200 phones, which is 70% of the Indian market, can only be done by domestic companies, and this puts Dixon in a sweet spot.
The company’s fourth-quarterly earnings have also beaten estimates and delivered a good financial performance. The net profit jumped 66.84% to ₹27.6 crore.
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