Electronics · investment research
Dixon Technologies
DIXON
Verdict
NO ACTION
low confidence · 3-5 years
Composite score
47/100
Weighted across all eight pillars
Business quality
51/100
Moat, returns, balance sheet, cash, management
Valuation score
37/100
At 25.5x against a sector median of 25.5x, the price embeds roughly 12% earnings growth. Anything less has to come out of the multiple.
Decision intelligence
Every conclusion states what would make it wrong
WHAT
No action. Nothing here is compelling enough to deploy capital today.
WHY
- • Cash conversion scores 89/100 (stable) — Reported profit is backed by operating cash.
- • Industry & macro scores 31/100 (stable) — Electronics (India) demand is stable.
- • Balance sheet scores 36/100 (deteriorating) — Leverage is serviceable from current cash generation.
- • Management & governance scores 36/100 (improving) — Whether management historically delivered what it promised.
WHERE
Electronics · Small cap · position sized to at most 0% of an equity portfolio.
WHEN
Re-run this analysis after the next quarterly result.
WHAT IF WRONG
- • The thesis is wrong if ROCE falls below 14% or cash conversion stays under 70% for two straight quarters.
- • Valuation support fails below ₹12,671 of fair value — a drawdown to that level is a re-underwrite, not automatically a buy.
- • Watched risk: Leverage — Debt is 2.7x EBITDA.
WHAT NEXT
- • Read the latest quarterly cash-flow statement alongside the P&L.
- • Check GDP growth — it moves the earnings base independently of execution.
- • Compare against the sector peers listed below before sizing anything.
Dixon Technologies is a competitively exposed electronics business compounding revenue at 6.4% and profit at 10.1%, earning 17.6% on capital. Quality scores 51/100 and valuation 37/100 at 25.5x. The decision is therefore no action with low confidence — this is analysis for learning, not investment advice.
What does this business actually do?
Business understanding before ratios
Dixon Technologies operates in the Indian electronics sector with a small-cap footprint and a listed market value of about ₹85k Cr.
Revenue is earned across 4 reported segments; profitability is driven by realisations, mix and operating leverage rather than one-off items.
Revenue drivers
- • Volume growth in the core segment
- • Realisation / pricing power
- • Mix shift toward higher-margin lines
- • Capacity utilisation
Cost drivers
- • Raw material and input costs
- • Employee cost inflation
- • Depreciation from recent capex
- • Distribution and marketing spend
Moat · 38/100
No durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
Segment mix
Growth -3.4% · margin 25.2% — Flat to declining; drags the consolidated growth rate.
Growth 8.2% · margin 28.3% — Growing broadly in line with the overall business.
Growth 10.3% · margin 12.2% — Growing broadly in line with the overall business.
Growth 30.9% · margin 16.8% — Fastest growing part of the mix — watch whether margins hold as it scales.
Analysis pillars
Score, trend and the drivers behind each — no bare numbers
Business & moat
41/100Trend: stable · weight 14%
- MoatNo durable moat identified
Competition is largely on price; returns depend on execution and the cycle.
- Segment concentrationMobile & EMS is 15.9% of revenue
Revenue is spread across segments, which softens single-market shocks.
- EBITDA margin18.0%
Margin moved from 18.0% to 18.0% year on year.
Profitability & returns
51/100Trend: deteriorating · weight 16%
- ROCE17.6%
ROCE was 18.4% a year ago. Sustained ROCE above the cost of capital is what compounds value.
- ROE17.6%
Return on equity after leverage — read alongside debt levels.
- Net margin13.1%
Share of every rupee of revenue that reaches reported profit.
Growth quality
46/100Trend: improving · weight 15%
- Revenue CAGR (4y)6.4%
Top-line compounding over the reported history.
- Profit CAGR (4y)10.1%
Profit is compounding faster than revenue — operating leverage is working.
- Growth sourceAsset-light / incremental
Capex is 8.0% of revenue this year.
Balance sheet
36/100Trend: deteriorating · weight 12%
- Debt / EBITDA2.66x
Leverage is serviceable from current cash generation.
- Debt / equity0.58x
Capital structure relative to shareholder funds.
- Working capital107 days
Long cycle: each rupee of growth locks up more cash.
Cash conversion
89/100Trend: stable · weight 13%
- OCF / PAT117%
Reported profit is backed by operating cash.
- Free cash flow₹1,546 Cr
Cash left after maintaining and expanding the asset base.
Management & governance
36/100Trend: improving · weight 14%
- Guidance delivery61% of last 8 quarters
Whether management historically delivered what it promised.
- Promoter holding27.3% (+1.3 y/y)
Promoter ownership is stable or rising.
- PledgeNo pledge
No pledge disclosed in the sample data.
- Institutional flowFII -0.79 · DII +0.44
Direction of institutional ownership over the last year.
- Capital allocationMost operating cash is reinvested into the core …
Most operating cash is reinvested into the core business.
Industry & macro
31/100Trend: stable · weight 8%
- Demand trendstable
Electronics (India) demand is stable.
- StructureFragmented
Fragmented — share shifts are possible but price competition is real.
- Competitive intensityhigh
How hard it is to keep pricing and share.
- Macro driversGDP growth, Inflation, Interest rates
Variables that move the earnings base regardless of company execution.
Valuation
37/100Trend: stable · weight 8%
- P/E vs sector25.5x vs 25.5x
At 25.5x against a sector median of 25.5x, the price embeds roughly 12% earnings growth. Anything less has to come out of the multiple.
- Growth-adjusted2.54 (PE/growth)
Below ~1.5 the multiple is supported by growth; above ~2.5 it depends on the market staying optimistic.
- FCF yield1.82%
Cash return on the current market value, before any growth.
Financial history
Profit, cash and returns over five reported years
| Year | Revenue | EBITDA | PAT | OCF | FCF | ROCE |
|---|---|---|---|---|---|---|
| FY2022 | ₹16,346 Cr | ₹4,577 Cr | ₹1,877 Cr | ₹2,046 Cr | ₹84 Cr | 15.3% |
| FY2023 | ₹17,499 Cr | ₹2,275 Cr | ₹1,433 Cr | ₹1,591 Cr | ₹1,066 Cr | 14.3% |
| FY2024 | ₹18,651 Cr | ₹4,476 Cr | ₹2,104 Cr | ₹2,378 Cr | ₹326 Cr | 18.4% |
| FY2025 | ₹19,803 Cr | ₹3,565 Cr | ₹1,569 Cr | ₹1,804 Cr | ₹22 Cr | 18.4% |
| FY2026 | ₹20,956 Cr | ₹3,772 Cr | ₹2,754 Cr | ₹3,222 Cr | ₹1,546 Cr | 17.6% |
- ⚠ Working capital cycle is long; growth consumes cash.
Ownership & management
Who owns it, and have they delivered?
Promoter
27.3%
+1.3 y/y
Pledge
None
No disclosed pledge
FII
32.5%
-0.79 y/y
DII
18.6%
+0.44 y/y
Guidance delivered in 61% of the last eight quarters; average leadership tenure 15 years.
Most operating cash is reinvested into the core business.
- ⚠ Related-party transactions at 8.4% of revenue
- ⚠ Two auditor changes in the last five years
Industry & macro context
Electronics (India)
Demand trend
stable
Cyclicality
high
Competition
high
Regulatory pressure
high
Fragmented — share shifts are possible but price competition is real.
Macro drivers: GDP growth · Inflation · Interest rates
Valuation
fair versus the sector
P/E
25.5x
Sector median P/E
25.5x
P/B
1.72x
Earnings yield
3.92%
FCF yield
1.82%
PE / growth
2.54
Estimated fair-value band ₹12,671 – ₹16,191 , built on FY2026 EPS of ₹460.1. Gap to the current price: +1.6%. Ranges are a modelling output, not a target price.
At 25.5x against a sector median of 25.5x, the price embeds roughly 12% earnings growth. Anything less has to come out of the multiple.
Risk register
What can break the thesis, and how it is monitored
- Leveragemedium
Debt is 2.7x EBITDA.
Monitor: Quarterly gross debt and interest coverage.
- Cyclicalitymedium
Electronics (India) earnings swing with the cycle, so trailing numbers flatter the peak.
Monitor: GDP growth
- Governancehigh
Related-party transactions at 8.4% of revenue; Two auditor changes in the last five years
Monitor: Annual report disclosures and auditor commentary.
- Accounting qualitymedium
Working capital cycle is long; growth consumes cash.
Monitor: Cash-flow statement versus P&L each quarter.
Ongoing thesis monitoring
The thesis is a living position, not a one-time verdict
| Metric | Currently | Thesis holds if | Thesis breaks if |
|---|---|---|---|
| ROCE | 17.6% | stays above 15% | falls for two consecutive years |
| Cash conversion | 117% | stays above 80% | drops below 70% while revenue grows |
| Revenue growth | 6.4% CAGR | tracks the 12% priced in | slows for two quarters with no margin offset |
| Promoter holding | 27.3% | stable or rising | falls sharply or fresh pledge appears |
Peers in the same sector
Compare before sizing anything
Data quality 58/100
Stated openly, as required by the product principles
- • Fundamentals in this build come from a deterministic sample dataset, not licensed exchange filings.
- • Segment, ownership and management figures are illustrative and must be verified against annual reports.
- • Educational analysis only — not a recommendation to buy or sell any security.
- • Accounting flags reduce the reliability of the reported profit base.