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  • 25 Jan 2023
  • ICICIdirect

REVENUE TAKE HIT AMID WEAK DEMAND - DIXON TECHNOLOGIES LATEST QUARTERLY RESULT

DIXON - 15562 Change: -1,004.00 (-6.06 %)

Dixon Technologies - Q3FY23 First Cut

(CMP: Rs 3364 MCap: Rs 20,030 crore)

Q3FY23 Earnings Summary

Dixon Technologies' Q3FY23 revenue came in at Rs 2404.7 crore down ~22% YoY (down ~38% QoQ) on an unfavourable base of last year and lower demand of consumer goods. Consumer electronics segment (i.e. TV) and lighting products segment revenues saw a decline of ~39% YoY each to Rs 864 crore and Rs 263 crore respectively. Mobile & EMS segment revenues also declined by ~3% YoY to Rs 915 crore led by lower demand from key clients. Home appliances and security systems revenues grew by ~36% and 5% YoY to Rs 244 crore and ~Rs 118 crore respectively

The gross margin improved by 263 bps YoY (up 246 bps QoQ) due to better product mix and price hikes in some categories. As a result, EBITDA margin improved by 127 bps YoY (up 87 bps QoQ) to 4.6% supported by various cost optimisation measures. The reported EBITDA margin is in line with management guidance range of 3.8%-4.5% and is also in pre-Covid level range of 4.5-5%

PAT came in at ~Rs 52 crore up ~12% YoY (down ~33% QoQ) in Q3FY23 tracking EBITDA margin movement.

Views: We believe that Dixon has posted a disappointing performance on the topline front. Consumer Electronics revenue de-growth of ~39% YoY is substantially weak as a result of slower volume offtake and fall in realization. Lighting products and mobile & EMS segment revenue took a hit due to focus on rationalisation of high cost inventory and lower offtake from key clients amid lower consumer demand. The management has cut FY23E revenue guidance by 20% citing lower mobile revenues, however FY24E revenue guidance has been maintained at ~ Rs19000 led by client additions and new product launches.

Impact: Neutral