Dixon Technologies’ (India) share price surged 4% to an intra-day high of Rs 16,450 on the National Stock Exchange. The uptick in the stock price came after the company announced the signing of a binding term sheet to acquire a 51% stake in the India business of Singapore’s Q Tech group.
The company is looking to expand its camera and fingerprint module manufacturing business through the proposed majority acquisition of Q Tech India.
The acquisition will be carried out through a combination of primary and secondary investments, said Dixon Technologies in an exchange filing. The total amount of the transaction hasn’t been disclosed by the company.
Also, Dixon Tech entered the precision components segment with a 74% JV with Chongqing to make precision mechanical and metal parts and components for laptops, mobile phones, IOT, automotive products, etc.
“Acquiring majority stake in Qtech India is a major step forward in Dixon’s journey foraying into development and production of camera modules and fingerprint recognition modules across mobile handsets, IoT devices and automotive applications thereby strengthening backward integration plans of the Company,” Atul B. Lall, Vice Chairman and Managing Director of Dixon Technologies said in the same release.
Nomura on Dixon Technologies: Expect EPS to increase by over 5%
Nomura, a well-known international brokerage firm, reaffirmed its ‘Buy’ rating on Dixon Technologies, with a target price of Rs 21,409, implying a potential upside of 29%. It expects this deal to help raise the EPS (earnings per share) by more than 5% for Dixon by FY28, depending on the ramp-up. Similarly, precision components also address another 8-10% of BOM (Bill of Materials) for phones, etc.
“Thus, both these JVs, along with display module assembly (announced earlier with HKC), should help Dixon address 30% of BOM for smartphones/ laptops, etc (from 8-10% currently we estimate), which is significant and increases customer stickiness and moat in the business,” said Nomura.
Dixon Technologies’ stock performance
The share price of Dixon Technologies has risen 2.5% in the last five trading sessions. The stock has given a return of 13.4% in the past one month. However, it has declined 4.2% in the last six months. Dixon Technologies’ share price has raised investors’ wealth by 29% in the past one year.