Dixon Technologies shares fall after getting their second-lowest price target on increased competition

Shares of Dixon Technologies Ltd. declined as much as 3% on Wednesday, June 25, after brokerage firm Philip Capital trimmed its price target on the stock, citing increased competition in the mobile-phone assembly space.

The revised target of ₹9,085 is the second-lowest on the Street for Dixon, trailing only Morgan Stanley's bearish target of ₹8,696.

Philip Capital has maintained a 'Sell' rating on the stock and slashed its target price from ₹11,077 earlier. The new target implies a potential downside of 37% from Tuesday's closing levels.

Motorola, Dixon's largest client, has begun outsourcing domestic volumes to Karbonn. While Dixon was Motorola's sole manufacturing partner in CY24, the trend shifted in CY25. In February and March, outsourcing was minimal, but by April-May, Karbonn accounted for 25% of Motorola's monthly volumes. Philip Capital estimates this could rise to 35% by June.

The brokerage also flagged risks from Longcheer, Dixon's second-largest client, which has started outsourcing a small portion of its volumes to Karbonn as well. Longcheer's business with Dixon had grown over the past year, but in May CY25, it began outsourcing around 2% of volumes to Karbonn.

To reflect the growing competitive pressure, Philip Capital has cut its FY27 estimates for Dixon, revenue by 4%, EBITDA by 6%, and PAT by 9%.

On Tuesday, block deal data on the exchanges showed that the company's promoter, Sunil Vachani, sold some stake in the company via block deals.

Data showed that Vachani sold 16.7 lakh shares of Dixon Technologies on Monday at an average price of ₹13,301.47 per share, taking the total transaction value to well over ₹2,200 crore.

The total number of shares sold by Vachani amounts to 2.77% of the company's outstanding equity.

Motilal Oswal Mutual Fund was a buyer of most of the stake sold by Vachani. The fund bought 14.46 lakh shares at an average price of ₹13,307 per share.

Of the 33 analysts tracking Dixon Tech, 19 of them have a 'Buy' recommendation, five of them say 'Hold', while nine others have a 'Sell' rating on the stock.

Dixon Tech shares are trading 2.35% lower today at ₹14,161. The stock is still down 6% over the last one month and over 21% so far this year.

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