Dixon Technologies downgraded to ‘underperform’ by Jefferies

Jefferies Financial Group Inc. has downgraded Dixon Technologies (India) Ltd, citing softer business-to-consumer demand and stretched risk-reward ratios.

Strong business-to-business December quarter saw softness in discretionary demand impacting the B2C mix of Dixon, the brokerage said in a note on Feb. 26. “B2B and projects business continues to be healthy, supported by (a) CapEx cycle.”

On this basis, the brokerage downgraded Dixon to ‘underperform’ and has revised the target price to Rs 5,920 and to Rs 1,125 apiece, respectively.

Jefferies On Dixon Technologies

• Rating: Downgrade to ‘Underperform’; Target price revised to Rs 5,920 apiece.
• Risk-reward appears stretched.
• Stock has sharply rallied by over 150% in the last one year and now trades at FY25 PE of 73 times.
• The current growth trajectory could be a key monitorable post expiration of PLI tenure.
• Softer demand warrants caution, as most of Dixon’s end-user categories are B2C and discretionary.
• Jefferies cuts FY25 EPS by 2–3%.
• Dixon’s high valuations could normalise once the high growth phase is behind.

Dixon shares fall over 4%
Dixon’s stock fell as much as 4.68% during the day to Rs 6,620 apiece on the NSE. It was trading 3.31% higher at Rs 6715.05 per share, compared to a 0.01% advance in the benchmark Nifty 50 at 9:42 a.m.

It has risen 141.6% in the last 12 months. The total traded volume so far in the day stood at 4.1 times its 30-day average.

Eighteen out of the 29 analysts tracking the company have a ‘buy’ rating on the stock, three recommend ‘hold’ and eight suggest a ‘sell’, according to Bloomberg data. The average of 12-month analyst price targets implies a potential downside of 4.7%. NDTV