Summary of earnings call for Dixon Technologies (India) Ltd published on 28 Jul, 2025

Dixon Technologies (India) Limited
Q1 FY26
Call date · July 22, 2025

1 · Management Commentary

Key Positives

• Consolidated revenues grew 95% YoY to INR12,838 crores; EBITDA up 89% YoY to INR484 crores; PAT up 100% YoY to INR280 crores.
• Negative working capital cycle of 4 days and net debt of negative INR214 crores.
• Return on capital employed at 49.1% and return on equity at 33.9%.
• Strong growth in mobile phones (revenue INR11,663 crores, up 125% YoY), telecom/networking (INR1,410 crores, >250% growth), and robust order books across segments.
• Progress in backward integration and component ecosystem (camera modules, display modules, precision components).
• Capacity expansions underway in mobile, refrigerator, and home appliances; new product launches in cooling and washing machines.
• Multiple JVs (Longcheer, Vivo, HKC, Signify, Inventec, Q Tech, Chongqing Yuhai) progressing well.

Key Negatives

• Significant miss in television business volumes in Q1; however, refrigerator business performed strongly.
• Lighting segment facing commoditization and price deceleration in traditional products.

Forward Guidance

• Capex plans: Q1 capex of INR287 crores; FY26 total capex expected at INR1,150–1,200 crores, including investments in Q Tech, HKC, and Chongqing JVs.
• New products/segments: Foray into frost-free, side-by-side refrigerators, mini bars, deep freezers, visi coolers, robotic vacuum cleaners, dash cams, and smart watches.
• Expected client wins/losses: Strong order books across mobile, LED TV, and telecom; new export opportunities in lighting; no major client losses indicated.
• Revenue/margin outlook: Mobile volumes expected at 42–43 million (excluding Vivo); 15% QoQ growth in Q2 mobile volumes; margin expansion expected from backward integration and PLI benefits, with mobile margins to expand by 120–130 bps in FY27.
• Other strategic initiatives: Multiple JVs for deepening manufacturing and design capabilities; focus on premiumization in lighting; expansion into IT hardware (laptops, AIOs, servers).

2 · Q&A Highlights

Q 1 (Composite): What is the ramp-up plan, investment, and revenue outlook for the Q Tech camera module JV and other new JVs (Chongqing, HKC, Inventec)?
A (Management):
• Q Tech: INR400 crores for 51% stake, INR150 crores for capex; revenue last year INR1,977 crores, target INR5,000 crores in 4–5 years; margins to rise from 7–7.5% to 9–9.5%.
• Chongqing: Project cost ~INR100 crores, details being finalized.
• HKC: $130 million capex over time; 2 million mobile displays/month (expandable to 4 million), 1.8 million notebook displays, automotive/TV displays planned.
• Inventec: 60:40 JV for notebooks, AIOs, servers; operational by Q1 FY27.

Q 2 (Composite): What is the capex outlook for FY26 and allocation across businesses?
A (Management):
• Q1 capex INR287 crores; FY26 total capex INR1,150–1,200 crores, including expansion and acquisitions (Q Tech, HKC, Chongqing, core EMS).

Q 3 (Composite): What is the outlook for the consumer electronics (TV, refrigerator) segment and plans for new product launches?
A (Management):
• TV business had a significant miss in Q1 but order book for Q2 is strong (targeting 800k units, 70% ODM).
• Refrigerator business captured ~10% market in direct cool category; capacity expanding from 1.2 million to 2 million; targeting 50% growth in FY26; new products in cooling pipeline.

Q 4 (Composite): What is the status and strategic rationale for various JVs with Chinese partners (Longcheer, Vivo, HKC, Q Tech, Chongqing), and government approval process?
A (Management):
• Longcheer: 74:26 JV, PN3 approval expected soon, secures business post-PLI, expands product portfolio, joint design center planned.
• HKC: JV for display modules, PN3 approval in process, project implementation ongoing.
• Vivo: 51% acquisition under evaluation, approval expected in 60 days.
• Q Tech: No PN3 needed, deal to close in 2–2.5 months.
• Chongqing: PN3 application to be filed in 30–45 days.

Q 5 (Composite): What is the mobile phone business outlook post-PLI, export opportunities, and margin trajectory?
A (Management):
• Mobile volumes for FY26 expected at 42–43 million (excluding Vivo); 60–65 million including Vivo by FY27.
• Exports: FY25-26 target INR7,000 crores, ramping to INR11,000–12,000 crores; opportunities in Africa and US.
• Margins: Backward integration, JVs, and scale to offset PLI expiry; margin expansion of 120–130 bps in FY27, further upside in FY28.

Q 6 (Composite): What is the management bandwidth and talent acquisition strategy to handle multiple new projects?
A (Management):
• Multiple senior hires in strategy, digital transformation, components, display, R&D, and HR; ongoing talent acquisition to support growth.

Q 7 (Composite): What is the status of the CCTV/security surveillance business?
A (Management):
• CCTV business merged into Aditya Infotech; Dixon holds 6.5% minority stake, no operational involvement.

Q 8 (Composite): What are the expected margins for new component businesses (camera modules, display modules, mechanicals)?
A (Management):
• Camera modules: Margins to rise from 7–7.5% to 9–9.5% with scale, PLI, and deeper manufacturing.
• Display modules: Expected to be in higher double digits.
• Mechanicals: Margins expected to be robust, in double digits.

3 · Other Key Numbers

• Consolidated revenue Q1 FY26: INR12,838 crores (Q1 FY25: INR6,588 crores)
• Consolidated EBITDA Q1 FY26: INR484 crores (Q1 FY25: INR256 crores)
• Consolidated PAT Q1 FY26: INR280 crores (Q1 FY25: INR140 crores)
• Working capital cycle: Negative 4 days
• Net debt: Negative INR214 crores
• ROCE: 49.1%; ROE: 33.9% (as of June 30, 2025)
• Mobile phones revenue Q1 FY26: INR11,663 crores; operating profit INR395 crores
• Telecom/IT hardware revenue: INR1,410 crores; Hearables: INR247 crores; Wearables: INR175 crores
• Consumer electronics revenue: INR672 crores; Refrigerator revenue: INR328 crores
• Home appliances revenue: INR313 crores; operating profit: INR36 crores; margin: 11.5%
• Lighting revenue: INR188 crores
• Telecom & networking revenue: INR1,410 crores (>250% growth)
• Rexxam JV revenue: INR144 crores (highest ever)
• Q1 smartphone volumes: 9.6 million; Feature phone volumes: 5.7 million
• Q Tech last year revenue: INR1,977 crores; last year camera module volumes: ~40 million
• Planned mobile manufacturing campus: 0.8 million sq. ft. in Noida, completion by March 2026
• Refrigerator capacity expansion: 1.2 million → 2 million units
• Planned display module capacity: 2 million/month (expandable to 4 million) for mobiles; 1.8 million/month for notebooks
• Planned capex for FY26: INR1,150–1,200 crores
• Export revenue target for FY25-26: INR7,000 crores; ramping to INR11,000–12,000 crores
• Longcheer estimated India volumes: ~25 million
• Vivo India market share: ~22%; expected JV volumes: 18–20 million
• Camera module addressable market: 450–475 million units; Dixon in-house consumption target: 180–190 million units in 2 years
• Lighting JV with Signify (Philips): 50:50; operations to commence August 2025
• Inventec JV: 60:40 (Dixon:Inventec); operational by Q1 FY27
• Capex for Q Tech acquisition: INR400 crores (stake), INR150 crores (capex)
• Capex for Chongqing JV: ~INR100 crores (planned)
• EBITDA margin for camera modules: 6.5–7% (current), target 8.5–9.5%
• Mobile business margin expansion: 120–130 bps expected in FY27

Note: This is an AI generated summary of the earnings call. There may be inaccuracies in the summary. Please refer to the original transcript before making investment decisions.