Electronic Manufacturing Services (EMS) stocks are in the news after the government announced the Rs 62,500 crore Mobile Phone Manufacturing Scheme (MPMS), outlining incentive support on eligible sales for the manufacturing of mobile phones in India. One stock that’s particularly in focus after the news is Dixon Technologies. Is it poised for further upside, or is it time to book a profit?
The Dixon share price has shot up over 7% in the last 1 week and delivered 27% gains in the last 3 months. It is up 19% so far in 2026, but if you track the stock’s movement on a 1-year trajectory, it has declined 10% in the last 12 months. While some experts believe that the current Govt Scheme hugely benefits Dixon Technologies, alleviating concerns on margin erosion and customers’ retention, others are worried about the impact of greater competition in the space.
Dixon: What’s driving the share price now?
Two weeks ago, customs duty exemption was the big trigger, but the current govt scheme is seen as a key catalyst for the stock, along with the much-awaited Govt nod for the JV with Vivo Mobile India.
The Indian government granted approval to Dixon Tech’s long-pending joint venture with the Chinese phone maker Vivo, the single biggest factor for the stock since its disappointing Q4 FY26 results in May.
Dixon-Vivo JV: The changing dynamics
The JV will be in a 51:49 ratio between Dixon Technologies (majority stake) and Vivo under PN3 norms. The JV will act as a major contract manufacturer, producing smartphones and other electronic devices for Vivo and potentially other brands.
Before moving ahead, PN3 refers to Press Note 3 (2020), which is a regulatory guideline issued by the Indian government requiring prior government approval for foreign direct investments (FDI) from countries that share a land border with India (including China).
Why this JV matters more than the headline suggests?
Vivo sells 35 to 37 million smartphones in India every year. Under the new JV, Dixon Tech will manufacture smartphones for Vivo. The international brokerage house Nomura estimated that the JV could potentially ramp up volumes to 60 million handsets over the next few years, as 70% share in Vivo will top up 33 million units already sold by Dixon Tech in FY26.
“The JV will likely provide significant scale benefit and medium-term volume visibility in mobiles for Dixon Tech (potential to capture 35-38% industry share), and scope of margin improvement from backward integration,” said Nomura.
In the company’s Q4 earnings call in May, CEO Atul Lall told investors that Dixon Tech was deeply engaged with the government. “We feel that we are very close to it. And that’s where the status is. I reiterate that we feel that we are very, very close to it. Two months on, that claim has government paperwork behind it.”
Also, even prior to the JV approval, Dixon Tech enjoyed the dominant position in the Indian smartphone manufacturing set-up, with a 45-50% share of industry capacity and manufacturing presence across major smartphone brands.
Plus, the JV approval reflects sustained policy support for electronics manufacturing in India by the government, even in complicated cases, said Emkay Global in a research note.
HSBC Securities remarked that it is better-than-expected government support:
The number that still doesn’t add up cleanly
Dixon Tech’s Production Linked Incentive (PLI) incentives of around Rs 350 crore in FY26 are expiring this financial year, with nothing confirmed to replace them.
That’s a likely story. It is also, as of today, entirely unproven.
Dixon Tech is one of India’s largest contract manufacturers and a primary beneficiary of the Indian government’s PLI schemes for electronics.
As Dixon Tech has historically functioned primarily as an EMS assembler, it relies heavily on importing high-value internal parts, mainly from China and Taiwan.
However, in PLI 2.0, the government is pressing on the domestic value addition. The scheme outlined Rs 62,500 crore for mobile phones, which replaces the previous Large Scale Electronics Manufacturing programme.
Nonetheless, rising mobile exports and a specialty-EMS acquisition are supposed to drive a “strong acceleration” in the second half.
The trade now hinges on one signature
At roughly 62 times trailing earnings for a business running below 5% EBITDA margins, Dixon Tech was never going to be a “cheap” story.
But here’s the catch: smartphone assembly is a high-revenue, low-margin business.
Nomura said that the large scale provides scope for backward integration, which can drive margin improvement. Dixon Tech is already ramping up camera and display modules, which expand value addition. “Hence, we expect margins to expand from 3.3% in FY27 to 4.2% in FY28, and benefits should start getting visible from H2 FY27,” the brokerage said
Dixon Tech may report a large jump in consolidated revenue once the JV starts production, but Vivo owns 49% of the venture. As a result, only half of that profit actually belongs to the electronics assembler.
Additionally, production is also expected to start only in FY27, so the first year will likely bring a partial contribution at best. The fuller impact is expected to be shown in FY28.
“We think that the worst is behind us, and we see a good growth trajectory ahead,” said HSBC.
Will the new mobile phone scheme be a key driver for Dixon?
Jefferies said the earlier production-linked incentive scheme successfully established India as a global mobile phone manufacturing base but achieved lower-than-expected localisation of high-value components.
These approvals reflect the government’s increasing focus on developing domestic component manufacturing alongside handset assembly, as India looks to deepen local value addition across the electronics supply chain.
According to them, this scheme will be aimed at scaling domestic mobile production with value addition, and improving the supply chain and global competitiveness. But they anticipate higher competition now as compared to 2021. They have a Hold rating for Dixon Tech.
HSBC raised its rating on the stock to Buy from Hold and increased mobile phone margin estimates by 30 basis points for FY27-FY29.
“With better visibility on earnings and margins, we also raise our two-year forward PE multiple by 20% from 40x to 48x,” said HSBC. This led the brokerage to raise the 12-month price target to Rs 16,000 from Rs 12,000 earlier.
Nomura too maintained its ‘Buy’ rating on Dixon as the company is ramping up exports with its key customers, has two JVs (camera modules and display modules) to increase domestic value addition (DVA) to 25-30%.
Its planned joint ventures with regard to the enclosures and batteries segment are expected to further boost prospects. They see Dixon’s margin expanding to 4.2% in FY28 from 3.3% in FY27.
Conclusion
Though the JV with Vivo and the latest mobile phone scheme by the Govt are seen as definitive growth drivers for Dixon Tech, the street is divided on the potential upside for the stock. While Nomura and HSBC Securities rate it Buy, Jefferies flags concerns about increased competition. Most experts agree that Dixon Tech could be one of the key potential beneficiaries of this announcement, depending on execution.