Dixon Tech shares jump 6% after nod to HKC JV; Nomura bets on margin expansion

Shares of Dixon Technologies (India) Ltd. are gained 6% in early trade on Tuesday, March 10, after it has received the Ministry of Electronics and Information Technology's (MEITY) approval to form a joint venture with Chinese firm HKC Overseas Ltd. for display modules. Brokerage firm Nomura has projected a 49.6% upside potential for the stock, while JPMorgan remains 'overweight'.

The company's wholly-owned subsidiary Dixon Display Technologies Pvt. Ltd. (DDTPL) will be converted into a joint venture (JV), with Dixon holding 74% stake and HKC having the remaining 26% of the equity.

Once the transaction is completed, Dixon Display Tech will operate as a JV company, combining its local presence with HKC's international expertise to expand advanced display module production for India's electronics and automotive sectors, the company said

in an exchange filing.

The JV will focus on manufacturing, developing and distributing thin-film transistor LCDs, liquid crystal modules and other advanced display modules for notebooks, mobile phones, televisions, automotive displays, industrial applications and monitors.

Dixon Tech said the JV aims to strengthen India's domestic electronics manufacturing, reduce dependence on imports and support the local component ecosystem under the "Make in India" initiative.

HKC's investment required the Centre's approval under Press Note 3 of 2020 and the Foreign Exchange Management (non-debt instruments) Rules, 2019, because of cross-border investment regulations.

Nomura sees 50% upside

Brokerage firm Nomura has a 'buy' rating on Dixon Tech with a price target of ₹14,678 per share.

It said the backward integration into display modules will drive structural margin tailwind.

Dixon Tech's display plant construction is already on track with trials likely from the second quarter of the financial year 2027 and ramp up in the second half of FY27, Nomura said.

Within components, display module assembly (10% of bill of material) has healthy double-digit margins and 50 basis points to overall margins for Dixon by FY28, the analyst projected, adding up to 100 basis points later, with full ramp up.

The stock currently trades at 30 times its estimated earnings per share for FY28, it added.

JPMorgan 'overweight' on Dixon Tech

Meanwhile, JPMorgan is 'overweight' on the stock but has cut its target price to ₹13,000 from its previous ₹13,700.

It said the JV approval increases probability of getting the Vivo JV approval as well.

It has estimated incremental EBITDA from the HKC JV into estimates, however cut mobile volumes due to continued headwinds from increasing memory prices. This drives 13-14% EPS cuts over FY27-28, the analyst estimated.

JPMorgan said it remains 'overweight' on Dixon Tech as it sees healthy 36% earnings compound annual growth rate (CAGR) over FY26-28 on the back of components foraying through Q Tech and HKC.

Dixon Tech shares were up 6.1% at ₹10,399 apiece in early trade on Tuesday. The stock has declined 10.4% in the past month.

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