Dixon Technologies shares rise 4% on Google Pixel deal report

Shares of homegrown contract manufacturer Dixon Technologies rose as much as 4% to hit a record high on Wednesday after a media report said that the Noida-based company is expected to manufacture Google Pixel 8 smartphones in the country.

Dixon Technologies managing director and vice chairman Atul Lall recently said that manufacturing for a global brand through Compal is expected to commence by September 24. This follows Dixon’s wholly-owned subsidiary Padget Electronics signing a deal with Taiwan's Compal Electronics to make smartphones for the latter's customers.

Reacting to the development, shares of Dixon Technologies rose 3.9% in opening trade to hit an all-time high of ₹9,484.30 on the BSE. The company’s market cap crossed the ₹55,000 crore mark. The stock has gained 15% over the past five sessions and 43% in 2024. Over the past year, shares of Dixon have gained a whopping 185%.

In October last year, Alphabet Inc.-owned Google had announced plans to manufacture Pixel 8 smartphones in India. “In recent years, India has established itself as a truly world-class hub for manufacturing, resulting in a thriving environment for businesses to flourish,” Rick Osterloh, senior vice president, devices and services at Google, said at the time.

Last year, Dixon partnered with Chinese smartphone maker Xiaomi to carry out the manufacturing and export of mobile phones of Xiaomi and to also explore enhancing the component ecosystem in India through the wholly-owned subsidiaries of Dixon.

For the fourth quarter, Dixon posted consolidated revenues ₹4,675 crore as against ₹3,070 crore in the year-ago period, recording a growth of 52%. Consolidated EBITDA for the quarter was ₹199 crore as against ₹158 crore in the same period last year, growth of 26%. Consolidated profit for the quarter was ₹97 crore compared with ₹81 crore in the same period last year, which is a growth of 20%.

For the year ended March 31, 2024, Dixon reported consolidated profit of ₹375 crore, up 47% compared with ₹255 crore in FY23. Consolidated revenues for the year ended March 24 stood at ₹17,713 crore as against ₹12,198 crore last year.

“In the last fiscal year, we had already touched a significant milestone of manufacturing 15 billion smartphones and 38 billion feature phones. Now we have created a capacity of 45 million smartphones and 40 million feature phones. That's approximately 50% of the opportunity pool in this business,” says Lall. “We have been making incremental investments in this business in order to meet the increased order book of our customers.”

“We expect a strong growth in the volumes of Motorola smartphones, including a growth in export orders. A ramp-up in Xiaomi smartphone business is shaping up well and we will clock around ₹3 lakhs per month from May onwards. We are expecting a significant ramp-up in the coming months ahead of the festive season,” Lall says.

“Our balance sheet strength enables us to direct grow capital safely enable us to invest in the long-term development of our business. We strongly believe that we have a platform to sustain a strong revenue growth moving forward, addition of new customers across all businesses including some very large accounts in the mobile business,” he adds.