Dixon Technologies Q3 results: Shares decline 8.5% despite revenue growing 117% YoY and PAT rising 124%.

Dixon Technologies shares tank 8.5% despite solid Q3 numbers; are segments’ performance a cause of concern?

Dixon Technologies Shares Drop 8.5% Despite Strong Q3FY25 Results

Dixon Technologies, India’s leading electronics manufacturing services (EMS) provider, faced a steep decline in its stock price on January 21, 2025. The company’s shares plummeted by 8.55% to ₹16,056.65 apiece on the NSE, following the release of its Q3FY25 financial results.

Despite delivering robust growth in consolidated revenue and profit after tax (PAT), concerns over the performance of specific business segments seem to have dampened investor sentiment.

In this detailed analysis, we delve into Dixon Technologies’ Q3FY25 results, segment-wise performance, recent partnerships, and the possible reasons for the sharp correction in its share price.


Key Financial Highlights

1. Revenue Growth

Dixon Technologies reported an impressive revenue of ₹10,461 crore for Q3FY25, reflecting a 117% year-on-year (YoY) growth compared to ₹4,818 crore in the year-ago quarter.

2. EBITDA and Margins

The company’s EBITDA surged 113% YoY to ₹398 crore, up from ₹187 crore in Q3FY24. However, the EBITDA margin contracted slightly, falling by 10 basis points (bps) YoY to 3.8%.

3. Profit After Tax (PAT)

Dixon Technologies PAT witnessed a remarkable 124% YoY growth, reaching ₹217 crore compared to ₹97 crore in Q3FY24. The PAT margin showed a marginal improvement, rising by 10 bps YoY to 2.1%.

While these figures highlight Dixon’s overall growth trajectory, a closer look at its segment-wise performance reveals areas of concern.


Segment-Wise Performance Analysis

1. Mobile & EMS Division

The Mobile & EMS Division, Dixon Technologies largest revenue contributor, recorded revenue of ₹9,305 crore in Q3FY25.

  • Year-on-Year Performance: Revenue surged 190% YoY from ₹3,214 crore in Q3FY24.
  • Quarter-on-Quarter Performance: Revenue declined marginally by 1% from ₹9,444 crore in Q2FY25.

Operating profit for the segment showed robust growth:

  • YoY Growth: Operating profit rose 210% to ₹322 crore from ₹104 crore.
  • QoQ Growth: Operating profit increased by 5% from ₹308 crore.

Despite strong YoY growth, the sequential decline in revenue has raised questions about the segment’s sustainability.


2. Consumer Electronics & Appliances (LED TVs and Refrigerators)

This segment faced significant challenges, with revenue and operating profit both showing declines.

  • Revenue: ₹633 crore, down 32% QoQ and 55% YoY.
  • Operating Profit: ₹22 crore, falling 58% QoQ and 31% YoY.

The sharp drop in performance indicates slowing demand in the consumer electronics market, particularly in the LED TV and refrigerator categories.


3. Home Appliances and Lighting Products

Unlike the Consumer Electronics segment, the Home Appliances and Lighting Products divisions reported YoY growth in revenue and operating profit. This highlights the company’s ability to capture growth opportunities in smaller but expanding markets.


Recent Developments and Partnerships

1. MOU with Cellecor for Refrigerator Manufacturing

In December 2024, Dixon announced that its subsidiary, Dixon Electro Manufacturing, signed a memorandum of understanding (MOU) with Cellecor to manufacture refrigerators and related components. Cellecor is a prominent player in consumer electronics, offering a diverse portfolio of products, including mobile phones, smart TVs, and home appliances.

This partnership is expected to enhance Dixon Technologies presence in the consumer appliances market.


2. Joint Venture with Vivo for Smartphone Manufacturing

Dixon Technologies also partnered with Chinese mobile giant Vivo in December 2024 to set up a joint venture for manufacturing smartphones and other electronic devices.

  • Stake Division: Dixon holds a 51% stake, while Vivo India holds the remaining 49%.
  • Significance: The collaboration is poised to strengthen Dixon’s foothold in the high-growth smartphone manufacturing segment.

Share Price Performance

1. Decline After Q3 Results

On January 21, 2025, Dixon’s shares tanked 8.5% to ₹16,056.65 apiece on the NSE. This sharp decline followed the announcement of its Q3 results, indicating investor apprehensions about the company’s segment-wise performance, particularly in consumer electronics.

2. Long-Term Rally

Despite the recent dip, Dixon’s stock has delivered exceptional returns over the past 12 months, rallying 200%. The stock’s long-term performance underscores investor confidence in Dixon’s growth potential.


Challenges and Concerns

  1. Consumer Electronics Slowdown:
    The Consumer Electronics & Appliances segment has shown a steep decline in revenue and profitability. This trend could signal weakening demand or intensified competition in the market.
  2. EBITDA Margin Contraction:
    The slight decline in EBITDA margin to 3.8% reflects rising costs or pricing pressures in some segments.
  3. Sequential Decline in Mobile & EMS Revenue:
    While the segment posted strong YoY growth, the QoQ dip raises concerns about its growth sustainability.

Opportunities and Growth Drivers

1. Expansion in Consumer Appliances

The partnership with Cellecor positions Dixon to expand its presence in the fast-growing home appliances segment.

2. Smartphone Manufacturing Potential

The joint venture with Vivo could significantly boost Dixon’s revenues, leveraging Vivo’s brand strength and Dixon’s manufacturing expertise.

3. Increasing Domestic and Global Demand

With the growing demand for EMS solutions and the government’s push for “Make in India,” Dixon is well-placed to capture opportunities in both domestic and international markets.


Conclusion

Dixon Technologies’ Q3FY25 results showcase strong YoY growth in revenue and profitability. However, the segment-wise performance reveals underlying challenges, particularly in the Consumer Electronics & Appliances division.

While the stock’s 8.5% decline reflects market concerns, the company’s recent partnerships and long-term growth potential offer reasons for optimism. As Dixon navigates these challenges, its ability to sustain growth in key segments and capitalize on emerging opportunities will determine its future trajectory.

Investors should monitor Dixon’s segment-wise performance and strategic initiatives closely to make informed decisions.

Read more stock news on NiftyNews

Leave a Reply

Your email address will not be published. Required fields are marked *

Back To Top