The wait is finally over. The Government has approved Dixon Technologies and Vivo Mobile India’s joint venture (JV) to manufacture smartphones and other electronic devices in India. The company has also signed a shareholders’ agreement with Vivo to govern the management and operations of the proposed JV.
Dixon, Vivo JV to undertake Vivo’s smartphone manufacturing orders
Under the JV, Dixon Technologies will hold a 51% stake in the joint venture, while Vivo Mobile India will own the remaining 49%.
The new entity will operate as an original equipment manufacturer (OEM) of electronic devices, including smartphones. It will manufacture a part of Vivo’s smartphone orders in India and can also undertake OEM business for other electronic brands.
Dixon-Vivo JV sparks strong growth potential
Brokerage firm Motilal Oswal said that the 51:49 JV with Vivo will significantly increase the Dixon’s smartphone manufacturing volumes. Vivo currently holds around 23% market share in India’s smartphone market, and Dixon expects nearly 67% of Vivo Mobile India’s production volumes to shift to the new JV.
The brokerage projects a 33% CAGR in revenue, 37% CAGR in EBITDA, and 36% CAGR in profit after tax between FY26 and FY28.
“We factor in smartphone volumes of 45milion/55 million units for FY27/28, including Vivo volumes from Q3FY27 onward and an improved wallet share from other brands. Along with the scale-up expected in other segments,” Motilal Oswal said.
However, it expects EBITDA margin to decline by 50 basis points year-on-year to 3.3% in FY27, mainly because mobile PLI incentives are ending. It added that a better revenue mix across businesses should help limit the impact on margins.
For Q1FY27, Motilal Oswal expects Dixon to report 19% year-on-year (YoY) revenue growth, driven by more than 30% sequential growth in mobile phone volumes as demand improves.
Vivo JV to drive revenue growth from Q3FY27
“From hereon, the focus will be on demand revival and backward integration. Further announcements related to Mobile PLI 2.0 will also be positive for the company,” Motilal Oswal noted.
The brokerage firm also noted that Dixon is already doing a capex for backward integration for displays and camera modules. And we expect the benefits of this backward integration to start playing out from 2HFY27.
The proposed Mobile PLI 2.0 scheme is expected to focus on increasing domestic value addition by promoting local component manufacturing instead of only supporting handset assembly. The proposed policy targets more than 55% local content, backed by the Rs 400 billion Electronics Component Manufacturing Scheme (ECMS).
The brokerage estimates the partnership will add an annual manufacturing capacity of 20-22 million smartphone units. Dixon had earlier indicated that production could begin within 30-40 days after receiving approvals. Based on this timeline, Motilal Oswal expects the JV to start contributing to revenue and volumes from the third quarter of FY27.
Dixon-Vivo JV to start with Rs 5 crore capital
The joint venture will begin with an initial paid-up share capital of Rs 5 crore, which Dixon and Vivo will contribute in a 51:49 ratio.
As part of the transaction, the JV company will acquire certain manufacturing assets through an asset purchase agreement. It will also enter into a manufacturing and packaging agreement with Vivo to execute part of the company’s smartphone production orders in India.
The transaction remains subject to the completion of customary conditions and any required statutory or regulatory approvals. The companies have up to one year from the date of signing the JV agreement to complete these conditions, unless they mutually decide to extend the timeline.
Under the shareholders’ agreement, both Dixon and Vivo will nominate two directors each to the board of the joint venture company. The agreement also provides both partners with information and inspection rights, along with customary provisions covering reserved matters, pre-emptive rights, transfer restrictions, representations, warranties and dispute resolution.
Dixon eyes stronger foothold in Android smartphone ecosystem
Dixon said the partnership will strengthen its manufacturing capabilities and deepen its presence in India’s Android smartphone ecosystem.
“This association will bolster the Company’s manufacturing excellence and superior execution abilities. This partnership will further strengthen the Company’s foothold in the android smartphone ecosystem in India in line with Dixon’s strategic goals,” the company said in the filing.
The company also said that after incorporation, the JV will become a subsidiary of Dixon Technologies. Both partners will invest through cash consideration, with the final subscription price based on valuation reports prepared in accordance with applicable laws.
Dixon Technologies share price
The share price of Dixon Technologies has jumped nearly 3% in the early trade. On year-to-date (YTD) basis the stock has gained 12.29%.