Dixon Tech Shares Surge 10% After Global Brokerage Upgrades Stock Despite Missing Q4 Estimates

Dixon Technologies (India) shares surged by 10% to a record high on Friday after an upgrade by global brokerage firm Morgan Stanley. Previously rated ‘underweight,’ the stock received an ‘equal-weight’ rating, signalling a more favourable outlook.

What Happened: Morgan Stanley set a price target of ₹8,696 per share, indicating potential growth from Thursday’s closing price. The firm also projected a steady 42% compound annual growth rate (CAGR) in earnings from FY24 to FY28, prompting the upgrade.

In recent developments, Dixon Technologies has attracted major mobile customers and plans to invest $30 million in manufacturing display modules for mobile phones.

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On Thursday, the company announced its new partnership with Chinese smartphone brand Realme to manufacture display modules. An executive disclosed to ET that Dixon is negotiating with another global brand to become a customer in September.

Despite the optimistic outlook, Morgan Stanley expressed concerns about Dixon Technologies’ ability to meet guidance and maintain low working capital levels.

The company fell short of estimates for the January-March period as profit margins dropped by 110 basis points from the previous year. This decline occurred as the share of its lower-margin mobile and EMS businesses expanded to 66% from 46% during the quarter.

Price Action: Dixon Tech shares were trading 9.5% higher at ₹9,044.65 on Friday at midday.

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