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Shares of Dixon Technologies fall 7% to hit 52-week low; should you buy, sell or hold?

Dixon Technologies has underperformed the benchmark Nifty 50, which is down 7.50 per cent so far in 2022. However, having fallen to fresh lows, analysts expect the stock to rebound and expect as much as 24% upside.

Dixon Technologies share price
Dixon Technologies (India) shares fell over 7 per cent on Tuesday to hit a 52-week low.

Dixon Technologies (India) shares fell over 7 per cent on Tuesday to hit a 52-week low of Rs 3548.15 apiece. The stock extended its losses, having tanked 11 per cent so far in the last five trading sessions and 34 per cent year-to-date. Dixon Technologies has underperformed the benchmark Nifty 50, which is down 7.50 per cent so far in 2022. However, having fallen to fresh lows, analysts expect the stock to rebound and expect as much as 24% upside.

“The stock is presently below all the three key moving averages. The most recent downtick is following its breakdown from 4050-4450; the technical targets out of this breakdown can be put near 3550 levels. The stock is very near to this level,” Milan Vaishnav,  CMT, MSTA, Consulting Technical Analyst and founder, Gemstone Equity Research & Advisory Services, told FinancialExpress.com. “That being said, there are no triggers for any fresh entry on this stock; either on the long or the short side. Shorting this stock is now not advised as it may not offer any favorable risk-reward ration. For longs, one must wait for any initial signs of some potential bottom in place,” Vaishnav added.

“The stock has been under pressure due to the aggressive selling by FPIs across the board. The FPI holding in Dixon has come down from 20% to 16% over the last year and it looks like it is bearing the full brunt of FPI selling,” Abhay Agarwal, Founder, and Fund Manager, Piper Serica, SEBI Registered Portfolio Management Service Provider said. Factors such as ED freezing accounts of Dixon’s customer Xiaomi, and slowdown in demand for mobile phones amid supply crunch will keep pressure on the stock’s price in the near term, it will also provide a very good opportunity to long-term investors since Dixon is a clear leader in the rapidly growing EMS space, Agarwal added.

According to Bloomberg, of the 21 analysts tracking the company, the majority of analysts have recommended a ‘Buy’ rating for the stock and they see an upside of 24.3 percent to the stock. 12 of the analysts suggest a ‘buy’ rating for Dixon Technologies’ stock, five analysts recommend a ‘hold’ rating and four maintain a ‘sell’ rating.

Last week the benchmark BSE and NSE stock exchange sought clarification from Dixon Technologies, which is one of the key suppliers of LED TV business to Chinese mobile manufacturing company Xiaomi, about movement in its share price. The company said the “price movement of security of the Company can be a consequence of recent news circulated widely in the media regarding one of our key customers in the LED TV business.” 

Last month, officials at the Enforcement Directorate seized over Rs 5,551 crore worth of funds from Xiaomi for violating the Indian foreign exchange law. “We would like to submit to the exchange that there is no adverse impact on the business of the Company and the Company perceives no impact on its receivables,” Dixon Technologies added.

The BSE had also sought the company’s clarification on increase in volume of its stock last week, to which the company said it has “not withheld any material information or event which in its opinion will have bearing on either the price of the securities or the volume of the securities.”

Dixon’s mobile & electronic manufacturing services division accounted for about 31 per cent of the company’s overall revenue and 27 per cent of operating profit for the quarter ended March 2022. For the quarter ended December 2021, the company reported revenue of Rs 2,089 crore and net profit of Rs 35 crore.

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