Dixon Tech shares jump 10% to new high after Morgan Stanley upgrades stock
Dixon Technologies (India) surged almost 10 percent in intra-day deals on Friday to their record high of ₹9,064 apiece, after global brokerage firm Morgan Stanley upgraded the stock to 'equal-weight' from an earlier 'underweight’ rating post its March quarter results (Q4FY24). However, the brokerage has a target price of ₹8,696 for the stock, implying a 4 percent downside from today's record high. Morgan Stanley expects an earnings CAGR (compound annual growth rate) of 42 percent for the firm during FY24 to FY28, which led to this upgrade.
The brokerage also noted that Dixon Technologies has on-boarded large mobile customers in the last six months and the company is looking to invest $30 million in manufacturing display modules for mobiles, which are some key positives. However, Morgan Stanley highlighted that concerns about delivering guidance and sustaining low working capital remain. Following today's surge, the stock has now soared almost 206 percent from its 52-week low of ₹2,965.85, hit on May 18, 2023.
It has already rallied over 178 percent in the last one year and 38 percent in 2024 YTD, giving positive returns in 4 of the 5 months so far. The stock has risen 7.6 percent in May so far, extending gains for the 4th straight month. It also rose 11.5 percent in April, 11.9 percent in March and 11.5 percent in February.
However, the scrip fell 8.8 percent in January 2024. Dixon Technologies missed the Street's estimates for the January-March quarter, mainly due to a 110 basis points year-on-year contraction in margins. This contraction was caused by the proportion of low-margin mobile and electronics manufacturing services (EMS) businesses rising to 66 percent from 46 percent earlier in the quarter, pointed out the
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