Motilal Oswal has reiterated a Buy rating on Dixon Technologies with a target price of Rs 14,700, implying an upside of around 30% from the current market price of Rs 11,287, even as the brokerage points to continued near term pressure on volumes and margins. In its April 16, 2026 company update.
The brokerage house stated that said rising memory costs and weaker smartphone demand are weighing on performance at present, though it expects recovery to be driven by backward integration, scale benefits and new approvals over the next few years. Motilal Oswal added that margin expansion is likely to take shape from the second half of FY27 as new businesses begin contributing in a meaningful way.
Motilal Oswal on Dixon Tech: Strong long-term drivers intact
Motilal Oswal said the investment case for Dixon Technologies remains anchored in its strategy to deepen backward integration and move up the value chain in electronics manufacturing. The firm pointed out that the company is building capabilities across display modules, camera components and precision parts, which could improve margins over time.
The report noted that regulatory approvals and planned partnerships will play a key role in enabling this transition, especially as the company looks to expand beyond assembly into component manufacturing.
“Long term catalysts outweigh near term challenges,” Motilal Oswal said.
The brokerage added that these initiatives will take time to reflect in earnings, but once scale is achieved, they are expected to support both profitability and growth.
Motilal Oswal on Dixon Tech: Memory prices and demand weigh on near-term
Motilal Oswal flagged a sharp rise in memory prices as a major headwind, noting that global cost pressures have led smartphone brands to increase prices across several models. This has impacted demand, particularly in the segments where Dixon has a strong presence.
The firm said memory prices have increased by more than 100% as of March 2026 compared to December 2025, forcing brands to pass on higher costs to consumers.
“Dixon manufactures smartphones for most of the low to mid price ranges, where volume pressure is being felt due to higher prices,” Motilal Oswal said.
The brokerage expects these pressures to persist over the next few quarters, keeping volumes under strain even as companies try to protect margins.
Motilal Oswal on Dixon Techn: Smartphone sales decline, add to pressure
Motilal Oswal also pointed to weak industry demand, with smartphone shipments in India declining during the early part of calendar year 2026. This has added to the pressure already created by rising input costs.
The firm cited industry data showing that smartphone sales fell by about 9% year on year in the first nine weeks of calendar year 2026, largely due to supply side constraints and higher prices.
“While volumes remained under pressure, value growth continued to hold steady, driven by sustained premiumization,” Motilal Oswal said.
It added that while higher pricing has supported overall value growth, unit volumes in the low to mid segments are likely to remain impacted through FY26.
Motilal Oswal on Dixon Tech: Approvals and partnerships key triggers
Motilal Oswal said recent approvals under government schemes and ongoing discussions around partnerships could act as key triggers for Dixon Technologies in the coming years. The company has received approvals related to display manufacturing and other components, which are expected to support its expansion plans.
The report referred to developments involving a joint venture for display manufacturing, which will focus on liquid crystal modules used across devices such as mobile phones, notebooks and automotive displays.
“ECMS approval to support backward integration,” Motilal Oswal said.
The brokerage also noted that approvals for optical components and camera modules have already been secured, while a potential joint venture with a global smartphone brand is awaited and could drive additional volumes once operational.
Motilal Oswal on Dixon Tech: Margin recovery expected from FY27
Motilal Oswal expects margins to remain under pressure until the first half of FY27, before improving as new initiatives begin to contribute and scale benefits start to come through. The firm said the current phase reflects higher costs and lower operating leverage as the company invests in new capacities.
From the second half of FY27, margin expansion is expected to pick up, supported by backward integration and improved utilisation levels.
“With PLI benefits nearing the end and high memory prices impacting volumes, Dixon’s margins are expected to remain under pressure until first half of FY27,” Motilal Oswal said.
The brokerage added that expansion in camera modules and entry into precision components manufacturing are expected to aid profitability over time.
Motilal Oswal on Dixon Tech: Financial outlook points to strong growth
Motilal Oswal expects strong growth across revenue and earnings over the next few years, driven by a recovery in volumes and contributions from new business segments. The firm has built in assumptions of improved demand and new client additions as approvals come through.
The report estimates smartphone volumes to increase to 5.18 crore units in FY27 and further to 5.63 crore units in FY28, supported by scale up and new partnerships.
“We expect a CAGR of 28% 32% 30% in revenue EBITDA and PAT over FY25 to FY28,” Motilal Oswal said.
Margins are expected to improve gradually, with EBITDA margin projected at 3.6% in FY27 and 4.3% in FY28.
Motilal Oswal on Dixon Tech: Valuation and rating remain intact
Motilal Oswal stated that while valuations remain elevated on the basis of near-term earnings, the long-term growth outlook supports the current multiples. The brokerage house has based its valuation on FY28 earnings expectations.
The firm has assigned a target price of Rs 14,700, implying a valuation multiple of around 55 times FY28 earnings.
It added that execution of integration plans and timely approvals will be key factors to watch over the coming quarters.
Conclusion
Motilal Oswal said Dixon Technologies is in a phase where short-term pressures from rising costs and weak demand are weighing on performance, though the company is building capacity and capabilities that could support stronger earnings over the medium-term.
The brokerage maintained that improvements in margins and scale from FY27 onward could support growth.
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