Dixon Technologies shares surge 4% following acquisition, JV; check all details

The electronics manufacturing services company signed a binding term sheet to acquire a 51% stake in Kunshan Q Tech Microelectronics on Tuesday.

The deal will be made through a combination of primary and secondary investments for collaboration in the manufacturing and supply of camera and fingerprint modules for mobile handsets, internet of things (IoT) systems, and automotive applications.

"The proposed acquisition is subject to the signing of definitive agreements, receipt of regulatory approvals, if any, and completion of customary conditions precedent,” Dixon said in a regulatory filing.

The acquisition will allow Dixon to access advanced technology, high-precision manufacturing capabilities, and a specialised talent pool that will enable its expansion in India’s electronics component industry.

In a separate filing, Dixon Technologies also said that it has inked a pact with Chongqing Yuhai Precision Manufacturing Co. Ltd to form a prospective joint venture (JV) in India.

Dixon will hold 74% of the total paid-up share capital of the JV, while Chongqing will hold the remaining 26% stake.

The JV is being established for the manufacturing and supplying of precision components for laptops, mobile phones, IoT, automotive, and any other products, the company had said.

Shares of Dixon Technologies were trading at ₹16,275 apiece on the National Stock Exchange, gaining 2.86%.

Following these developments, several brokerage firms have shared positive views for the company.

Brokerage firm CLSA said that the recent acquisitions and JVs could raise Dixon's value addition in smartphones to 45-55% from 15-17% currently.

Global investment bank JP Morgan has also noted that the acquisition and JV in components for backward integration should lead to earnings upgrades for Dixon Technologies.

In the March quarter of FY25, Dixon Technologies reported a consolidated net profit of ₹401 crore in the January-March quarter, marking an increase of four times, or 321%, from ₹95 crore in the same period last year.

The sharp jump in profit came on account of an exceptional item of ₹250 crore arising from the sale of AIL Dixon Technologies Private Limited shares to Aditya Infotech Limited.

Dixon Technologies' revenue from operations in Q4 FY25 jumped 121% to ₹10,293 crore as against ₹4,658 crore in the year-ago period.

The company had reported strong operational performance in the March quarter, as its earnings before interest, taxes, depreciation, and amortisation (EBITDA), also known as operating profit, jumped 143% to ₹443 crore, and its EBITDA margin improved by 40 basis points to 4.30%.