Adding my thoughts on the Noida-based manufacturing firm in the Electronic Manufacturing Space (EMS) that is now popularly known as India’s Foxconn globally.
Almost every major electronics equipment manufacturer (think Apple, Samsung for smartphone producer, or Google in Television), are either in talks or have inked deals for manufacturing in this space.
They are present in 9 verticals – LED bulbs, Televisions, refrigerators, washing machines, security surveillance among others. They have over 17 manufacturing factories and 3 R&D labs to build and grow their business. Another 6 are in pipeline which gives it enough capacity to grow.
Their current deals with Google, Xiaomi, Panasonic are all helping it grow its own R&D through series of joint development programs. It is also entering the new high-margin areas like drones, Electric Vehicles etc.
The fundamentals of this company are strong and are expected to rise with the new Capex investments in improving capacity and streamlining operations. However, it has grown by 260% already in last one year which creates a skepticism in the market growth.
Based on my valuation models, there is only limited upside left to grow for Dixon based on current forecasts. Once new earnings come, another re-rating can be done.
I have added my company analysis here and the valuation models used:
The Next Big Stock Idea | Has this manufacturing star become a trading stock? | Dixon Technologies
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