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Shares of Dixon Technologies (India) tumbled 20 per cent to hit a 52-week low of Rs 2,676.25 in Friday’s intra-day trade, after the company reported disappointing results for the December quarter (Q3FY23). Revenues declined 22 per cent year-on-year (YoY) to Rs 2,405 crore in Q3FY23, as consumer electronics and lighting sales declined 39 per cent YoY, and were the main segments that dented sales.
However, profit after tax during the quarter grew 12 per cent to Rs 52 crore, against Rs 46 crore in Q3FY22. Earnings before interest, taxes, depreciation, and amortization (Ebitda) margin, too, improved 130 basis points (bps) to 4.7 per cent from 3.4 per cent, in a year ago quarter. The management indicated that value engineering, cost optimization and certain price hikes were the main margin drivers.
Furthermore, the management cut FY23 sales guidance to Rs 12,000-Rs 12,500 crore, from Rs 14,000-Rs 14,500 crore guided a few months earlier. Sales guidance for FY23 at the start of the year was around Rs 17,000-Rs 18,000 crore.
Analysts at Emkay Global Financial Services believe slowdown in some key segments is hampering overall growth of brands, with additional impact from Dixon being a B2B supplier.
“In the last one year, the Street has cut FY23 EPS by over 30 per cent owing to lower sales. We have cut our FY23e-FY25e EPS by 16-20 per cent largely on account of lower sales, while margin remains at around 4 per cent,” the brokerage firm said.
Sales ramp-up remains the key monitorable going forward, in our view. Risks include slowdown leading to lower requirement by brands, analysts added.
Dixon is a company engaged in inter-alia manufacturing of the products in the consumer durables, lighting, home appliances, mobile phones and other electronic items in India.
At 11:30 am; Dixon traded 18 per cent lower at Rs 2,749, as compared to 1.3 per cent decline in the S&P BSE Sensex. It fell below its previous low of Rs 3,185.05, which it had touched on May 16, 2022.
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