The Dixon Tech shares are in focus. The stock is down nearly 30% in the last 1 year. Is this an opportunity to enter the stock? Key brokerage houses maintain their positive recommendation on the stock though they reiterated that this optimism is tempered by near-term challenges, execution risks and regulatory delays. JM Financial has an ‘Add’ rating on the stock while Nomura recommends Buy on Dixon Technologies. Nomura sees as much as 36% upside potential while JM Financial sees a relatively modest upside of around 14.5%.
Why Dixon Technologies is back in focus
Dixon Technologies operates in contract manufacturing across smartphones, consumer electronics and other segments. In recent months, the stock has corrected sharply, indicating concerns around approvals, margin pressure and weaker near term demand. As per the brokerage reports, this correction has brought valuation comfort for some analysts, even as near-term uncertainty remains.
JM Financial and Nomura both in their report noted that Dixon is navigating a difficult phase, especially in its mobile phone business. However, they also point to potential recovery drivers that could shape the company’s performance beyond the current financial year.
Let’s take a look at what the brokerages are saying –
JM Financial on Dixon Technologies
According to JM Financial, several factors have weighed on Dixon’s stock performance.
- What has worried the market so far
According to JM Financial, “three key reasons have spooked the Street on Dixon,” pointing first to delays in government approvals.
As per their report, “Risk to volume and margin starting FY27 in the absence of requisite government approvals (PN3 approvals for JVs with Vivo and HKC expected in November, 2025 hasn’t been received yet.” The management “expected in Januaty, 2026 as per management,” JM Financial added.
The second concern highlighted by JM Financial is the sharp rise in global memory prices. The brokerage noted that higher memory costs are increasing the prices of budget smartphones, which could impact volumes.
The third factor is the expectation of a weak third quarter, especially on the mobile manufacturing side. JM Financial also highlighted that execution delays, even if driven by external factors, have added to investor caution.
- Margin pressure and earnings reset
As per the JM Financial report, rising memory prices globally have added to cost pressures. The brokerage house noted that memory accounts for a higher share of the bill of materials in low-end smartphones, making affordability a concern. The report noted that smartphone prices could rise sharply, leading to volume risks, especially in the budget segment.
JM Financial has revised its earnings estimates downward, cutting profit estimates for the coming years. It also expects the third quarter to be relatively weak, with muted mobile revenue and limited operating leverage. The brokerage stated that while gross margins may improve due to product mix, “operating deleverage could limit the benefit to EBITDA margin.”
Based on revised assumptions, the brokerage maintained its ‘Add’ rating with a target price of Rs 13,800, implying about 14% upside.
Nomura on Dixon Technologies
Nomura’s analysis focuses on the rising memory prices and its impact on Dixon share price.
- Near-term pressure from memory prices
According to Nomura, “global memory prices (DRAM and storage) have increased by 30-40% quarter-on-quarter in Q3FY26,” driven by strong demand from artificial intelligence-related infrastructure.
As per the brokerage report, mobile companies in India have already raised prices, and further hikes are possible. The brokerage believes this could have some impact on overall demand, especially in the entry-level smartphone category. For Dixon, this is important because a large share of its volumes comes from brands focused on affordable devices.
Nomura noted that customers such as Transsion and Xiaomi, which together account for a significant portion of Dixon’s mobile volumes, operate largely in the entry-level segment. As a result, the brokerage expects “a soft Q3FY26.”
- Recovery hinges on approvals and new customers
Nomura’s medium term outlook is more constructive. According to the brokerage report, growth recovery is expected once the joint venture with Vivo begins operations, subject to government approvals.
The brokerage house also highlighted the potential addition of new customers.
The brokerage noted that “the ramp-up of the Vivo JV and addition of new customers could drive growth recovery,” especially in the year following the approval.
- Valuation comfort and upside view
Nomura has revised its estimates and reduced its target price to account for slower near-term growth and earnings cuts. It has also lowered its valuation multiple.
The brokerage report noted, “Maintain Buy; cut target price to Rs 16,598 (36% implied upside).” Nomura added that Dixon currently trades at a lower valuation multiple compared to its historical range, which it considers attractive given the long-term growth outlook, even though approvals remain a key trigger.
Dixon Technologies share performance
Dixon Technologies shares have fallen around 12% over one month and 24% over six months. The 52-week high of the company stands at Rs 18,471 and low is at Rs 11,480.
Disclaimer: This article provides factual analysis only and is not, and should not be construed as, an offer, solicitation, or recommendation to buy or sell securities. Investors must conduct their own independent due diligence and seek advice from a SEBI-registered financial advisor.