Multibagger Stock with High Price: Promoter Sells 16,70,000 Shares; Strong Order Book & PLI Scheme Ending by FY26
The current order book translates to a monthly volume of approximately 3.3 to 3.5 million units
On Tuesday, June 24, Indian benchmark indices were trading higher by over 1 per cent, buoyed by reports of a ceasefire in the Middle East. However, amidst this optimism, one stock failed to keep pace with the market's upward move, underperforming on the day. That stock is Dixon Technologies, a high-priced stock that has delivered multibagger returns in the past.
As of 11:15 AM on June 24, Dixon Technologies' share price was down by 0.36%, trading at Rs 14,524 per share on the NSE. However, an intriguing development was observed on June 23, when a bulk and block deal occurred for the stock. Sunil Vachani, the promoter of Dixon Technologies, sold 16,70,000 shares, which amounts to 2.77 per cent of the company’s stake, at an average price of Rs 13,301.47 per share. This reduced his shareholding in the company from 5.34 per cent to 2.57 per cent.
Motilal Oswal Mutual Fund emerged as the buyer, purchasing 14,45,637 shares at an average price of Rs 13,307.96 per share. Despite this offloading, Dixon Technologies' performance continues to impress. In Q4FY25, the company reported an astounding 379 per cent YoY jump in its net profit, rising to Rs 465 crore from Rs 97 crore in Q4FY24. This growth was largely driven by an exceptional item from the sale of AIL Dixon Technologies Private Limited shares to Aditya Infotech Limited. Excluding this one-time gain, the company’s profit still nearly doubled on a YoY basis.
Dixon Technologies' business segments demonstrate strong, diversified growth, supported by strategic initiatives, capacity expansions, and operational efficiencies. The mobile phones segment, for instance, reported revenue of Rs 9,102 crore for the quarter, a remarkable 194 per cent growth YoY. Operating profit in this segment stood at Rs 349 crore, with an operating margin of 3.8 per cent. The revenue included Rs 1,288 crore from telecoms, hearables, and wearables, along with Rs 196 crore from wearables. The management highlighted that the order book for mobile phones remains strong, with plans to expand capacity by 50 per cent to meet growing demand, especially for exports to North America, driven by geopolitical shifts. The current order book translates to a monthly volume of approximately 3.3 to 3.5 million units.
Dixon Technologies enjoys a first-mover advantage in the mobile manufacturing outsourcing market, primarily due to its strong relationships with major brands like Motorola, Transsion (iTel, Tecno, Infinix), and Vivo. This advantage is further bolstered by the company's ability to scale up quickly, particularly in North America and Africa.
Regarding the Production Linked Incentive (PLI) schemes, Dixon’s management noted that the mobile PLI will end by FY26. However, the company expects to counter this loss by enhancing operational efficiency, increasing automation, and focusing on backward integration in key components like camera modules, lithium-ion batteries, and display modules. These efforts are expected to mitigate the impact of losing PLI benefits, which currently contribute around 0.6 per cent to 0.7 per cent of the company’s mobile phone margins. Dixon is confident that, post-PLI, it will remain competitive thanks to its scale, cost structure, and strategic relationships.
With a PE ratio of 114x and a Return on Capital Employed (ROCE) of 39.8 per cent, Dixon Technologies has seen its stock price surge by 313 per cent over the last three years. Over the past year, the stock has delivered a 25.5 per cent return.
Disclaimer: The article is for informational purposes only and not investment advice.