- 03 Oct 2022
- ICICIdirect Research
Enforcement Directorate (ED) receives approval to seize asset of Xiaomi TechnologyDIXON - 2840 Change: -41.25 (-1.43 %)
According to media sources, the ED has received approval from competent authority (assigned by Karnataka high court) to seize amount Rs 5551 crore of mobile major Xiaomi Technology. Xiaomi had received notice from ED in April 2022 against the violation of foreign exchange management.
Xiaomi is the key customer of Dixon for its LED TV segment. However, Xiaomi’s revenue contribution in Dixon’s overall topline declined sharply from 25% in FY21 to 11% by the end of FY22, due to addition of new customers. Apart from Xiaomi, Dixon also manufactures LED TV for other customers such as Samsung, Panasonic, Vu etc. Upon the development of ED’s action on Xiaomi and expectations of its sales hit during the festive season, we had already lowered our revenue estimates for Dixon for FY23E and FY24E (by 11%, 10% for FY23E, FY24E respectively) in our Q1FY23 update.