Dixon Technologies’ stock is under focus following a 265% YoY increase in Q2 profits to Rs 412 crore.
Shares of Dixon Technologies, a contract producer of electronics, will come under scrutiny following the company’s announcement of a 265% year-over-year increase in net profits to Rs 412 crore, driven by higher production of mobile phones and an extraordinary gain of Rs 209.6 crore in the fiscal second quarter of FY2025.
In the July-September period, Dixon reported revenues of Rs 18,116 crore, a 120% year-over-year rise from Rs 4,944 crore in the same period last year.
In the meantime, Dixon Technologies declared in the second quarter of its fiscal year that it will transfer 95 lakh equity shares of the joint venture to Aditya Infotech, selling it its whole 50% ownership in AIL Dixon. This transaction resulted in a one-time extraordinary gain.
After accounting for the extraordinary gain, the company’s net profit in Q2 FY25 climbed 109% year over year to Rs 236 crores.
After a robust Q2 performance fueled by a dramatic increase in mobile revenues, Investec has maintained its ‘Buy’ recommendation on Dixon and increased the target price from Rs 12,700 to Rs 15,900.
The company still thinks Dixon has a great chance to expand in the IT hardware industry, which has a lot of room for expansion. Dixon’s entry into the components manufacturing market is also anticipated to boost the company’s profitability and competitiveness, setting it up for future expansion, according to the brokerage firm.
Additionally, the corporation authorized the issuance of 1.85 lakh stock options in one or more tranches to its workers as well as those of its subsidiaries and joint ventures. These stock options have a face value of Rs 2 apiece and can be converted into an equivalent number of equity shares of the business.
57% of the company’s quarterly revenues and 47% of its operating profit came from its mobile phone manufacturing sector. With Rs 308 crore in operational profit, the mobile phone segment generated Rs 9,444 crore in sales. This comprises earnings from the manufacturing of telecom equipment (Rs 660 crore) and wearables and hearables (Rs 263 crore).
Dixon’s recent purchase of the bulk of Transsion’s manufacturing division, Ismartu, generated Rs 1,111 crore in sales during the second quarter of the fiscal year.
Operating profit contribution dropped from 25% to 12% in Q2 FY25, while revenue contribution from the company’s consumer electronics and appliance sector, which produces refrigerators and LED TVs, dropped from 29% to 12% in Q2 FY25. On the basis of Rs 1,413 crore in revenue, the appliance business recorded an operating profit of Rs 52 crore.
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