Dixon Technologies (India) Ltd (NSE:DIXON) is a leading Indian electronics manufacturer and is primarily engaged in the production of consumer electronics, home appliances, lighting products, and security systems. The company has a diversified portfolio of products and customers, including major brands like Samsung, Xiaomi, and Philips. Dixon Technologies has been expanding its operations in recent years and has also ventured into new segments like smart TVs, security systems, and IoT devices.
In the third quarter of FY23, Dixon’s revenues declined by approximately 22% YoY to Rs. 2,404.7 crore. This was mainly due to a sharp decline in revenues of consumer electronics and lighting products by around 39% each. The mobile and EMS segment revenue also declined by 2.6% YoY. However, the company’s gross margin improved by 263 basis points (bps) YoY due to a better product mix and price hikes in some categories. As a result, EBITDA margin improved by 127 bps YoY to 4.6% supported by better operating leverage and cost optimization measures. The company’s profit after tax (PAT) grew by around 12% YoY to Rs. 52 crore on account of better EBITDA.
Further analysis shows that consumer electronics (TVs) revenue declined by around 39% YoY to Rs. 864 crore as a result of an early Diwali season in FY23 and lower realization due to a significant reduction in open cell prices. The mobile and EMS revenues declined by 2.6% YoY to Rs. 915 crore as a result of subdued demand from the company’s anchor customer, Motorola. Home appliances revenues increased by around 36% YoY to Rs. 244 crore led by a healthy order book and new customer additions. Lighting revenues declined by around 39% YoY to Rs. 263 crore due to lower realization caused by a reduction in commodity prices and migration of technology. Security system revenues grew by around 5.1% YoY to Rs. 118.4 crore in Q3FY23 led by an increase in orders of set-top boxes.
Overall, despite the weak topline performance, Dixon Technologies is showing signs of recovery with improved margins and cost optimization measures. The company’s focus on diversification and expansion into new product categories and geographies is likely to drive growth in the future.