“Dixon clearly has been standing tall,” said Renu Baid Pugalia, Senior Vice President of Research at IIFL Institutional Equities. She said the company faces no constraints on its balance sheet, cash flow or returns profile, and that approval of its joint venture (JV) with Vivo has addressed near-term growth concerns.
Pugalia’s comments follow the government’s notification of a mobile manufacturing scheme worth ₹62,500 crore, running from the current financial year 2026-27 (FY27) through fiscal 2031. Looking three years out, IIFL estimates the scheme will add close to 1.5% of export revenue in incentives for Dixon, even as the company’s export volumes rise sharply.
IIFL expects the mobile phone segment to reach close to 4% earnings before interest, taxes, depreciation, and amortisation (EBITDA) over the next two years as component joint ventures scale up — management itself is targeting margins above that level.
The scheme replaces the earlier Production Linked Incentive, or PLI, program. Under PLI, incentives were tied to a company’s total sales growth. Under the new scheme, incentives are tied only to incremental revenue, set at a base of about ₹5,000 crore in additional sales each year.
“The scheme is structured to promote brands in terms of increasing their presence in India, but the EMS companies will also benefit,” Pugalia said, referring to electronics manufacturing services providers like Dixon that assemble devices on behalf of phone brands.
Dixon’s revenue grew from about ₹600 crore before PLI to more than ₹30,000 crore afterwards, and Pugalia said margins on that base improved from 2-2.5% to nearly 3.5% last year. She expects margins to briefly dip to around 3% in fiscal 2027 as the older incentive structure phases out, before a newer component scheme, called ECMS, begins contributing from the second half of this financial year.
Dixon’s stock has risen from below ₹10,000 to around ₹14,000 this year. Pugalia said much of that move already reflects expectations around the Vivo joint venture and the new scheme, adding that the impact on margins remains less certain than the impact on volumes, since it depends on commercial terms Dixon negotiates with phone brands.Pugalia said the overall smartphone market is not growing this year, with total annual industry volumes near 150 million units. Dixon produced about 32.5-33 million units last year and has guided for flat volumes, though the Vivo joint venture is expected to add roughly 8 million units this year. A possible reduction in the Goods and Services Tax (GST) rate on phones could support demand at the lower end of the market, she said.
Export volumes are where IIFL sees the clearest growth path. The firm had forecast 5 million export units for Dixon this year and has now raised that to 7-7.5 million, rising to 10-11 million next year and close to 14 million by fiscal 2029 — below the 15-20 million range management has guided toward. Dixon also supplies Google Pixel, and Pugalia said the company is positioned to gain if global brands shift sourcing away from China toward markets including Vietnam and India.
Asked to rank Dixon against peers, Pugalia said the company’s balance sheet and cash flow set it apart. “This makes Dixon a clear buy to us compared to most of the other midcap or smallcap EMS companies that we look at,” she said. By contrast, she noted that Kaynes Technology has faced working capital issues since the end of March 2026, worsened in the first quarter by supply chain factors in its electronics and metering businesses, with improvement expected only by December 2026.
For the full interview, watch the accompanying video
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