JPMorgan maintained its “overweight” rating on Dixon Tech with a price target of ₹12,700 apiece, indicating an upside potential of 3.8% from its previous close. However, the stock crossed this level in trade on Wednesday itself.
Why Is JPMorgan Bullish On Dixon Tech?
The brokerage, in its recent note, revisited the Vivo JV approval scenario. Dixon Tech had highlighted that Vivo had annual volumes of around 35 million in India, of which, 67%, or 22 million, would come to Dixon Technologies.
As per the Dixon Tech management, the JV could lead to revenue uplift of ₹30,000 crore, with a higher average selling price compared to the existing mobile portfolio.
If the JV is approved in June then operations would likely start after 60 to 90 days, which will be the third quarter of the ongoing fiscal.
JPMorgan assumed the JV could contribute 11 million to mobile volumes in FY27 and 22 million in FY28. This could drive a 24% – 39% upgrade to revenue estimates over FY27-28 but a lower 13% – 18% earnings per share (EPS) upgrade due to the 51:49 JV format that drives minority interest, JPMorgan added.
Earlier this month, Dixon Tech’s founder and chairman Sunil Vachani told CNBC-TV18 that he is hopeful of getting the Vivo JV approval soon and that the proposal is under active consideration.
On Tuesday, brokerage firm CLSA downgraded its rating on Dixon Tech to “underperform” from “hold” but maintained its target price of ₹10,400 apiece, calling the recent rally in the stock “overdone.”
Of the 32 analysts who have coverage on the Dixon Technologies, 22 have a “buy” rating, three have a “hold” rating and seven have a “sell” rating.
Shares of Dixon Tech gained 5% to hit an intraday high of ₹12,859 apiece on Wednesday. The stock has gained 18.9% in the past month and has turned positive on a year-to-date basis.
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