Dixon Technologies (India) Ltd. is the largest home-grown design-focused and solutions company engaged in manufacturing of products in the consumer durables (LED TVs, Washing Machines), lighting products (LED bulbs, LED drivers, CFL bulbs) and mobile phone markets in India. It also provides solutions in reverse logistics i.e. repair and refurbishment services of set top boxes, mobile phones and LED TV panels. It has 6 manufacturing facilities located in Uttar Pradesh and Uttarakhand. Dixon's clientele include Panasonic India, Philips Lighting India, Haier Appliance, Gionee, Surya Roshni, Reliance Retail, Intex Technologies, Mitashi Edutainment and Dish Infra Services. Top 3 customers (Panasonic, Philips and Gionee) accounted for ~75% of FY17 revenue, while Top 5 accounted for ~83% of revenue. Dixon has registered revenue and PAT CAGR of 31% and 54% respectively during FY14-17.
- Leading market position in key verticals
- Strong relationships with a diverse top-tier customer base
- Continue to focus on ODM model
Outlook & Valuation
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Indian consumer electronics and appliances market is expected to register CAGR of 16.5% between FY16-21 reinforced by the surging rural consumption, reducing replacement cycles, increasing penetration of lifestyle appliances and availability of multiple brands at various price points. We are positive on the company owing to strong revenue visibility, low capacity utilization, established relationships with its clients, strong clientele, leverage play, healthy balance sheet (D/E- 0.2) and high return ratio (ROE-25.7%). At the upper end of the price band, the stock is available at P/E of 39.4x based on FY17 earnings, which is reasonable considering strong revenue visibility and low capacity utilization. We recommend SUBSCRIBE to the issue with long term perspective.
SPA Securities was promoted by a team of finance professionals in 1995 with an objective to provide value added financial services. Initially, the Group focused as a niche financial solutions provider in corporate finance and wealth management to Indian companies and high net worth individuals. In January 2000, the Group expanded its operations and the range of services. Today, SPA provides services for securities broking, merchant banking, wealth management, financial advisory, corporate finance , risk management and insurance broking.
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