Jefferies downgrades Dixon Technologies rating to ‘hold’ on stretched valuations
₹4,550, the brokerage has downgraded the stock from 'buy' to 'hold'. According to the brokerage report, Dixon Technologies shares now trades at roughly 59x FY24e PE, which is about 30% higher than its historical average, following a recent 55% rally, and the the valuation appears stretched. “Even so, it now trades higher than branded B2C companies such as Crompton Greaves Consumer Electricals Ltd, V-Guard Industries Ltd, Polycab India Ltd, Whirlpool of India Ltd, the company's FY23-26e EPS CAGR at +47% is forecast to be higher than most coverage companies, driven by upside from 5 PLI schemes - Mobiles is the largest.
But most positives appear priced in post sharp rally," the brokerage said. On Thursday's trade, the Dixon Technologies shares were up by nearly 1%. According to technical analysts, the stock prices had a spectular bull run during the month of May and June moving from the lows of around 2840 to recent highs of 4730, however now in the last couple of weeks, prices have seen correction .
The next retracement level support for correction comes around 4,000 that can be considered as a buying opportnity, 4,600 - 4,800 is seen as immediate resistance. Dixon Technologies shares lost nearly 3.5% on Wednesday's session following downgrade by the global brokerage. In its analysis, Jefferies highlighted that the present weak demand poses downside risk to the current high-growth outlook because the majority of items are discretionary.
Dixon Technologies is a business-to-business (B2B) contract manufacturer, according to the report. Sales planning by branded firms has a significant impact on the order books of electronic manufacturing services (EMS) providers. Given that the majority of Dixon's end-user categories are
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