Dixon Technologies : Latest Result Analysis & Implications

Dixon Technologies Result

As per the company website, it states that Dixon technologies is a homegrown manufacturing company, Dixon Technologies provides design-focused solutions in consumer durables, home appliances, lighting, mobile phones and security devices to customers across the globe, along with repairing and refurbishment services of a wide range of products including set top boxes and mobile etc.

Let us analyse the latest Dixon Tech results in wake of coronavirus pandemic

Dixon Tech - Q4 FY20 (Audited –Cons)
CMP: 5,033

Total income from operations 857 Cr
859 Cr (-0.02%) YoY | 994 Cr (-13.72%) QoQ

Year ending revenue: 4,400 Cr Vs. 2,984 Cr (47.41%)

Net Profit of 27.5 Cr
16.5 Cr (66.67%) YoY 26.3 Cr (4.53%) QoQ

Year ending Net profit: 120.5 Cr Vs. 63.3 Cr (90.31%)

EPS (in Rs.) 23.51
14.38 YoY | 22.33 QoQ

Year ending EPS: 102.7 Vs. 55.14

View: The result is overall good and above expectations. YoY revenue flat but profit increased in YoY and QoQ.

Business Updates & Highlights:

Q4FY20 YoY bottom line growth for consumer electronic – 138%, Lighting product – 18%, Home appliances – 4%, Mobile phones – 416%, Security system – 20%. Despite negative topline growth for some of the business segment the company maintain good line of operating profit.

Q4FY20 EBITDA is around INR 55.9 Cr Vs. 39.3 Cr in Q4FY19 therefore up by
42.2% in YoY. EBITDA margin is 6.5% Vs. 4.6% in Q4FY19 therefore up by 190
bps.

FY20 EBITDA to Rs. 228.2 Vs. 140.5 Cr in FY19 therefore up by 62% in YoY.
EBITDA margin of 5.2% Vs. 4.7% in FY19.

Finance cost in Q4F7.6 Cr Vs. 8.8 Cr in Q4FY19 therefore declined by 13.6%
in YoY.

Key business updates

Company is primarily into five operating segment viz. Consumer electronics
– 45.7%, Lighting products – 30%, Home Appliances – 10.5%, Mobile Phones –
7%, Security systems – 6%.

Q4FY20 YoY topline growth for consumer electronics – 22%, Lighting products
– (16%), Home Appliances – (3%), Mobile Phones – (10%), Security system –
(20%).


Financial

ROE and ROCE is around 26% and 33% respectively and book value per share is
around INR 385 and share is currently trading at 13x of its book value.
The company is currently trading at annualized PE of around 49.5 which is
expensive as per Industry benchmark. Promoter holding is around 36.1% in
the company which is low and slightly decreased in QoQ. FIIs and mutual
funds hold around 10.8% and 22.1% in the company. Cash and cash equivalent
from operating activities as of March 2020 is around INR 237 Cr Vs. 143 Cr
as of March 2019. Debt as of March 20 is around INR 86 Cr Vs. 141 Cr in
March 2019 (**Very positive**). A/c receivable is around 43 days which is
also good and fair.

Position: Share strong support price is INR 4,850. Long term investors can
continue with the company with a target price of INR 5700. Short term share
will also perform despite in ASM.

Share View: Share price high 5,572 (52 weeks) and now 4,976. Dixon
Technologies provide design-focused solutions in consumer durables, home
appliances, lighting, mobile phones and security devices to customers
across the globe, along with repairing and refurbishment services of a wide
range of products including set-top boxes, mobile phones and LED TV panels.

Opportunities: Company has a diversified business models according to current
and future markets. The share has achieved at all-time high despite the market
corrected heavily. As per the current report, Dixon is also going to make
COVID – 19 Testing machine also. Dixon became the leader of the Indian EMS industry
by i) entering multiple segments, ii) backward integration, iii) focus on
ODM solution. As per the current innovative technology, Dixon can be a good
performer in the longer run. Despite YoY topline decreased in some segment but
bottom line improved and significantly well performed.

Risk: Due to COVID – 19 outbreak the company topline impacted in the Q4 and
it can be also be impacted in Q1 and Q2 FY21 as well. Since spending
currently through essential products and goods.

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