Dixon Tech shares decline 8% despite posting record profits

On Wednesday, Dixon Technologies' share price dropped 8 percent in the day’s trade, touching a day’s low price of Rs.15,270 per share on NSE despite delivering a robust performance in Q4FY25 and for the full fiscal year of FY25, which significantly surpassed market expectations. The company reported a remarkable 121 percent year-on-year increase in revenue for Q4FY25, reaching Rs. 10,292.5 crore, up from Rs. 4,658 crore in the same quarter last year. This surge in revenue exceeded analyst estimates, reflecting robust demand across its categories.

The company’s EBITDA rose sharply by 143 percent year-on-year to Rs. 442.8 crore, compared to Rs. 182.5 crore in Q4FY24. The EBITDA margin expanded by 40 basis points to 4.3 percent, up from 3.9 percent in the previous year, indicating improved operating efficiency despite rising expenses. Operating profit more than doubled, supported by strong revenue growth and better operating leverage.

Dixon Technologies’ Profit before tax (PBT) after exceptional items increased by 343 percent to Rs. 576 crore. The Profit after tax (PAT) surged 379 percent year-on-year to Rs. 465 crore in Q4FY25. This impressive profit growth was significantly aided by a one-time exceptional gain of Rs. 250.4 crore related to the sale of AIL Dixon Technologies Private Limited shares to Aditya Infotech Limited.

For the entire financial year FY25, Dixon Technologies reported a revenue of Rs. 38,860 crore, marking a 120 percent increase from Rs. 17,691 crore in FY24. The company’s full-year PAT more than doubled, rising 229 percent to Rs. 1,233 crore. This strong annual performance reflected sustained demand across its consumer durables, lighting, and mobile phone segments, along with improved operating margins and economies of scale.

The company’s board recommended a final dividend of Rs. 8 per equity share, which is 400 percent on the face value of Rs. 2 each for FY25. This dividend proposal is subject to shareholders' approval at the upcoming 32nd Annual General Meeting (AGM), and the dividend will be credited within 30 days from the date of the AGM.

Despite the strong financial results, Dixon Technologies’ share price experienced a drop in share price post-announcement. The stock slipped around up to 7.8 percent, as investors might have booked profits following the impressive Q4 earnings. However, the shares have delivered strong long-term growth, appreciating around 1,700 percent over the past five years. The stock’s all-time price is Rs. 19,148.90, touched on 17th December 2024, as per NSE.

Brokerage firms like Nomura have a “Buy” rating with a price target of Rs. 21,202 and said that Dixon was ahead of estimates, with the mobile segment increasing to cater to domestic and export demand. Improving value addition is expected to help margin expansion, as per sources. Further, brokers like Jefferies have maintained an underperform status for Rs. 13,300, and other brokers cite heightened valuations despite strong earnings.

Overall, Dixon Technologies showcased robust growth in Q4FY25 and FY25, driven by a significant increase in revenue, improved margins, and a one-time exceptional gain that increased net profits multiple times. The company’s strong operational performance and strategic focus on contract manufacturing in consumer electronics and related sectors had its impact on impressive financial results and a positive outlook for the future.