A Brief Outline of Dixon Technologies (India) Ltd
(This is just for information purpose only; this should not be construed as investment advice though the author is a CFA Charterholder. Readers should consult their own investment advisor before making any investment decisions.)
A Brief Sketch of Dixon Technologies (India) Limited:
the company belongs to Electronic Manufacturing Services (EMS) sector
the company manufactures consumer electronics, mobile phones and lighting products as an OEM (original equipment manufacturer)
the company's other products include home appliances
its customers include, Motorala, Bosch India, Lloyd, Croma, TCL, Nokia, Bharti Airtel and Sharp
the company had done wonders in scaling up its sales in the last seven years
return on capital employed (ROCE) numbers in Screener.in seem to be incorrect (as per company's annual report, return on equity ROE and ROCE ratios are lower for 2020-21 & 2021-22)
sales growth is much higher than fixed assets growth (because of outsourcing of manufacturing?)
Oct-Dec2022 quarter results were weak for Dixon Technologies; stock promptly got sold off
latest available promoter holding is 34 percent (so-so) -- diluted from 38 percent in 2019
foreign portfolio investors (FPIs) and domestic institutional investors (DIIs) hold 36 percent in the stock's equity, which is decent
because of low profitability and high capital expenditure, company does not give much dividends
EMS sector in India has great potential provided India attracts companies, like, Foxconn and others to shift manufacturing from China and Vietnam to India
the company's debt-equity ratio is 0.37, which is manageable for a high-growth firm
as on 29Mar2023, the stock's market price is Rs 2,830 per share, with a market cap of Rs 16,850 crore
as at close of 29Mar2023, the stock indices levels are as follows: Sensex at 57,960; BSE 200 at 7,279; Nifty 50 at 17,081; India VIX at 13.63; USD-INR at 82.20 and India 10-year G-Sec yield at 7.30 percent
hard to make long-term money in companies betting on government's doles / incentives
(investors made huge money in the stock in the past cycle is a different issue)
low promoter holding
the optimism on the stock and in the EMS sector are already reflected in the price in my opinion
valuations are rich, because of scarcity premium and investor over-enthusiasm
even if you're attracted to the stock by the potential in the EMS sector, you may buy smaller quantities and test the waters in your experimental portfolio
low gross profit margins (GPM), operating profits (OPM) & net profits (NPM), especially in the last two years
if the company scales up its original design manufacturing (ODM) capability for multi-national corporations, then the stock may get re-rated higher
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Disclosure: I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial instruments / products discussed, if any.
Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets.
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He blogs at:
https://ramakrishnavadlamudi.blogspot.com/
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