This Mid Cap Stock Gave More Than 800% Returns In 3 Years, Q1 Revenue Rose 53% Y/Y, Buy: Anand Rathi

Anand Rathi in its recent report published on August 3, on Dixon Technologies (India) Limited has suggested buying the stocks of the company for a target price of Rs 4582 apiece. Considering the brokerage estimated target price, the stock of the company could surge 20% in 12 months. Dixon Technologies is a mid-cap consumer durable electronics company with a market capitalization of Rs 22,768.31crore.

Stock Outlook & Returns

Today the shares of Dixon Technologies opened at Rs 3,780.30 apiece, and after a gain of 2.17% closed at Rs 3,836.80 apiece. The current market price of the stock is Rs 656.25 above its 52 week low and Rs 2406.8 below the 52-week high.

The 52-week low of the stock record was recorded on May 16, 20212 at Rs 3,180.55 apiece and the 52-week high was recorded on October 19, 2021, at Rs 6,243.69 apiece. The ROE of the stock is 19.07%. TTM PE ratio is 104.60 and PB ratio is 22.83. TTM EPS is Rs 36.68. The dividend yield is 0.05%% and the face value is Rs 2.

In the past 1 week, the stock gained 7.22% and 6.83% in the past 1month, respectively. However, in past 1 year, the stock has fallen 9.4%. In the past 3 years, it has given whooping returns of 876.98%. Since its listing on the exchange, it has delivered 563.45% returns. It was listed in September 2017.

Tepid start to FY23

Q1 FY23 revenue rose 53% y/y on the lower base. Q/q though, it declined 3% to Rs28.6bn. The EBITDA margin contracted 50bps on the 10bp lower gross margin. Staff and other manufacturing expenses rose respectively 2% and 6% q/q. PAT fell 28% q/q as depreciation charges rose 26% q/q and interest cost was 4% higher q/q to Rs144m

FY23 capex : Rs 3.1bn-3.2bn; Talks on to manufacture semi-conductors

The FY23 capex is expected to be Rs3.1bn-3.2bn: (a) Rs180m for the JV with Bharti to manufacture telecoms products, (b) Rs200m a year for the next five years to comply with lighting PLI scheme norms, (c) Rs500m for PLI pertaining to air-conditioners and (d) new plant with Rexamm to manufacture printed circuit boards.

Buy with a Target Price of Rs 4582 apiece

The brokerage said, "Post-Q1 FY23, we lower Dixon's FY24e revenue and PAT 12% and 29% respectively to factor in slowing demand and higher costs, which are gradually being passed on to customers. The cut in PAT estimates is more than that in revenue considering one-time investments, as the company plans to make a foray into refrigerators.

The brokerage in the report, said, "At the CMP of Rs 3,752, the stock trades at 74x and 46x its FY23e and FY24e EPS of Rs50.8 and Rs81.8 respectively. We retain our Buy rating on it, with a target price of Rs4,582 (56x FY24e EPS of Rs81.8), the earlier Target Price being Rs5,936. The PE has been sliding continuously since Sep'21 and the mean PEx is 61x."

According to the brokerage, the key risk is Significant delays in receiving PLI from the government could impact its cash flows.

Disclaimer

The stock has been picked from the brokerage report of Ventura Securities. Greynium Information Technologies, the Author, and the respective Brokerage House are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to check with certified experts before taking any investment decision.