Dixon Technologies Q2 Review - Margin Below Expectation; Entering High Capex Mode: Nirmal Bang
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Nirmal Bang Report
Dixon Technologies (India) Ltd. reported consolidated revenue of Rs 28 billion (+71% YoY), 26.9%/12.1% above our/consensus estimate.
Gross margin was down 290 bps YoY at 8.9%. Ebitda came in at Rs 1.1 billion (+23.1% YoY) with Ebitda margin of 3.9% (-160bps YoY), below our/consensus estimate of 4.6%/4.2%. PAT at Rs 626 million was above ours/consensus estimate of Rs 609 million/Rs 613 million.
Rising commodity prices continue to adversely affect the margin which will normalise going forward. Management has guided for Rs 110-120 billion of topline in FY22 and Rs 160-170 billion in FY23.
The growth outlook for the next few years remains robust, led by;
1. Mobile phone PLI revenue booking (already started from Q4 FY21)
2. Value and volume growth in LED TV business
3. International business opportunities in lighting (4) foray into new verticals (fully automatic top-load washing machines, refrigerators, wearables etc)
5. Further diversification prospects through PLI schemes (IT Products like laptops and tablets, telecom equipment etc)
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