Steady Q4; growth momentum intact
▪ Beat on revenue/EBITDA/ PAT; Q4 revenue grew 121%YoY, led by 194% YoY growth in Mobile & EMS
▪ Guides for ~45-50% YoY handset volume growth in Mobile Phones over FY26 and FY27
▪ Ascribe 70x to FY27E EPS to arrive at Mar’26TP of Rs 19,100; assume coverage with BUY
Performance beat on all fronts: DIXON Q4 performance beat on all fronts. Revenue/EBITDA/PAT were 4%/18%/6% ahead of our estimates. Revenue grew 121% YoY/-2% QoQ, led by a strong growth in the Mobile & EMS division. EBITDA margin expanded 40bps YoY to 4.3% (50bps ahead of estimates), absolute EBITDA grew 143% YoY/13% QoQ. However, on account of higher depreciation and interest costs, adjusted PAT grew 58% YoY (6% above estimates). For FY25, revenue/EBITDA/PAT grew 120%/116%/107% YoY respectively.
Mobile Phones & EMS sustains YoY growth trajectory, albeit with QoQ decline: The Mobile and EMS segment delivered 194% YoY revenue growth but declined 2% QoQ. Growth was led by client additions, strong hearables/wearables revenue (Rs 1.9bn vs Rs 720mn YoY), and a sharp rise in telecom revenue to Rs 12.9bn (vs Rs 2.3bn YoY). Ismartu contributed Rs 11bn (vs Rs 18bn QoQ). Segment EBIT margin expanded 40bps YoY to 3.8%. FY25 mobile volumes stood at ~28.3mn units. Management guides for Rs 40–43mn in FY26 and 60–65mn in FY27, aided by anchor clients and the Vivo JV starting Q4FY26.
CE and appliances declined on market share loss and structural challenges: Consumer Electronics (CE) segment reported a revenue decline of 23% YoY (+9% QoQ). As per management, the decline was largely on account of market share (MS) loss in the LED TV segment and sustained structural challenges in the industry (demand deceleration globally). DIXON is working on various fronts to fix the market share loss such as expanding product portfolio, backwardly integrating to offer better pricing and looking for large strategic relationships. For FY25, TV volume fell from 3mn to 2.4mn units (in line with guidance).
Assume coverage with BUY: We believe DIXON is well-placed to benefit from the rising outsourcing of electronics manufacturing. Going ahead, growth will be driven by new client additions via JVs and expanded capabilities in electronic components. We model 35–40% revenue/EBITDA CAGR over FY25–27E and ascribe 70x on FY27E EPS and arrive at March FY26 TP of Rs 19,100 and we assume coverage with BUY.
