However, they flagged potential risks to the company's margin outlook for the first half of FY27. Despite these concerns, the broader sentiment remained neutral to positive on the stock. Component JVs will offset PLI in the medium term, they said.
While concerns on H1FY27 margin risk emerge, as PLI ends in March 2026, the medium-term margin expansion target of 130-150 bps stays intact, said Nuvama as it maintained 'Hold' on the stock with a June-2026 target price of Rs 16,100, on fair valuation.
"We maintain our Buy rating on Dixon Tech with a revised target price of Rs 19,140, valuing the stock at 63x FY27E EPS - a 15 per cent discount to its 5-year average. We remain positive on the stock because of the recent developments such as securing contracts covering 30 per cent of India's IT hardware market, expanding wallet share with existing clients, onboarding new customers and JVs and acquisitions for backward integration enhance our confidence," Nirmal Bang Institutional Equities said.
Emkay Global took note of mobile PLI expiry in FY26 and sees 0.6 per cent Ebitda margin impact due to that. Despite this, it feels Dixon Tech would continue enjoying strong competitive advantage on scale-led operating leverage, deepening customer relations and benefits from backward integration.
"The management highlighted that while PCB is not lucrative (on lack of duty arbitrage), PCBA for industrials, automotive application, etc could be a major driver for Dixon's next phase of growth. Dixon remains committed to expanding margin by deepening its value proposition via backward integration. We cut our target by 4 per cent to Rs 19,000, to factor in the impact of minority interest from recent/upcoming JVs and acquisitions; maintain BUY," Emkay Global said.
MOFSL said Dixon Tech's revenue, Ebitda and PAT came in ahead of its estimates, with the mobile segment registering a strong growth of 125 per cent YoY. Ismartu integration, improved volumes from existing clients and higher exports led to a YoY jump in mobile volumes during the quarter, it said.
"The company is following a two-pronged strategy for growth. This strategy will provide revenue visibility and improve margin in the coming years. A display facility with HKC, a camera module with Qtech and precision components with Chongqing Yuhai Precision Manufacturing will help Dixon address a larger portion of BoM of smartphone, which should improve margins and customer stickiness for Dixon in the long run," MOFSL said.
The JV with Longcheer and Vivo is seen adding incremental volumes on a sustainable basis for the company. MOFSL maintained 'Buy' on the stock with a revised target of Rs 22,100.