Dixon Technologies share price rises 13%, despite a significant drop in net profit; here is why

Dixon Technologies shares are buzzing in trade on Monday after delivering steady volume growth with a negative bottomline performance for the quarter gone by. Despite a decline in the net profit, the shares soared 13% on Monday, as company’s outlook and guidance for the coming quarters and next FY, bolstered investor confidence.

Here’s what boosted investor confidence for Dixon after benign Q2FY27

Topline soars but bottomline struggels

Dixon Technologies, which is India’s leading electronic manufacturing services company (EMS) announced superior top-line growth of 42% YoY at ₹21,806 crore as compared to ₹15,351 crore in the corresponding quarter of last year. After adjusting for the fair value gain on Dixon’s stake sale in Aditya Infotech Ltd gain on Transfer of lightning business and undertaking , the revenue jumped 47% YoY to ₹21,806 crore as compared to ₹14,858 crore.

Despite the robust growth in the topline, the company suffered headwinds in cost price inflation during the quarter. The earnings before interest, taxes, depreciation and ammortisation declined 37% YoY to ₹666 crore as compared to ₹1,057 crore, similarly, the EBITDA margin fell over 400 points to 3.1% as compared to 7.1 in the previous year’s same quarter. Consequently, the net profit fell 45% YoY to ₹411 crore as compared to ₹746 crore.

Mobile & other EMS Division delivers robust growth

Dixon Technologies’ largest segment mobile and other EMS division, remains its key growth driver and the sentiment booster for its shareholders. The segment’s Q2FY27 revenue jumped 50% YoY and 42% sequentially to ₹20,093 crore as compared to ₹13,361 crore in the same period last year and ₹14,179 crore in the previous quarter. The company manufactured ~9.7 million units of smartphone volumes during the quarter and ~17.2 million for the H1 of FY27. The growth in mobile and other EMS segment is pivotal at a time when the Indian smartphone market is down 26% YoY in Q2FY27. The growth is largely attributed to stickiness for most of its portfolio of customers.

Vivo JV: Catalyst for future growth

The major optimism in shares despite strong de-growth in profitability, is mainly due to company’s guidance for incremental outcome from the joint venture with Vivo. The management guided for commencement of operations for Vivo smartphones in Q4 of FY27. Vivo sold ~31 million smartphones in India in 2025, holding 21.5% smartphone market share.

The management provided optimistic guidance of incremental output from the JV by the end of FY27. The company expects to add ~20-21 million units from Vivo at an annualised rate and the company in total expects the volume to cross ~50 million by FY28. Besides this, the management also said that it has added one new Indian customer for the smartphone and other EMS segment, who can add another ~8-10 million units in the next year.

General outlook and guidance

While general volume growth remain benigns in the flat-to-negative territory, the company passed on the cost-price inflation to the customers, keeping the topline growth intact for the quarter. As memory prices go through the roof, the overall cost of materials as percentage of revenue has surged to ~95% of the revenue as compared to ~93% in the previous year’s same quarter, consequently, the company raised the ASPs, (average selling prices) of the products to safeguard the topline growth. Going forward, the management expects, if the memory chip price inflation cools down and the topline further drives higher, and could help revival in operational profitability and margins.

FII ownership rises.

With steady growth in the topline and operational headwinds, company’s Q2FY27 earnings missed the market participants estimates. However, institutional investors remain bullish on the stock as foreign investors added stakes in the company during the September quarter.

After consistently paring their stakes from Q3 of FY25 to Q1FY27, the foreign investors have now raised their stake from 17.8% in Q1 to 18.96% in Q2FY27. After a sharp correction from its record high levels, the company still trades at 47x price-to-earnigns ratio, significantly lower than its five-year median of 114x.

In summary

Despite reporting de-growth in profits for the quarter ended September 2026, the investor optimism increased after company’s management guided strong volume growth in FY27 and improved margin guidance led by dip in the material price inflation. Will the rally sustain or fizzle out soon, needs to be closely monitored.