Synopsis: Morgan Stanley has doubts about Dixon Technologies, pointing to unclear IT hardware import rules that could slow down local production. Even with good results, the brokerage thinks these risks might stop the company from hitting its long-term targets.
Dixon Technologies, which is one of the largest EMS companies in India, came under the radar of investors after Morgan Stanley cited that it sees near term risks for the company. In this article, we will dive into the comments made by the brokerage on the EMS player.
With a market capitalisation of Rs 77,949 crore, the shares of Dixon Technologies (India) Ltd. closed at Rs 12,842.90 per share, down 3 percent from its previous day’s closing price of Rs 13,266.10 per share. Over the past five years, the stock has delivered a robust return of 405 percent, outperforming NIFTY 50’s return of 90 percent.
Leading global brokerage, Morgan Stanley, has maintained its “underweight” rating on Dixon Technologies and has assigned a target price of Rs 11,563 per share, signalling a further downside of 13 percent from its previous day’s closing price.
Morgan Stanley stays cautious on Dixon Technologies, pointing to uncertainty over India’s IT hardware import rules as a major risk to the company’s growth outlook. The brokerage kept its Underweight rating, arguing that current regulations could slow the growth of Dixon’s and could cause a problem in the company meeting its guidance.
The brokerage commented more on the Import Management System (IMS). Though meant to boost domestic manufacturing, Morgan Stanley says the policy still lets global brands like Acer, Lenovo, HP, and Asus import products under licences. That reduces the incentive to move production to India and limits opportunities for local EMS players.
Over the past two years, Dixon Technologies has kept its cumulative IT hardware revenue guidance at Rs 48,000 crore through FY31, which is above Morgan Stanley’s estimate of Rs 43,000 crore.
The brokerage thinks hitting that target will be hard, since it requires an annual revenue run rate of about Rs 7,500–8,000 crore, something it sees as unlikely in the current policy environment. Morgan Stanley also expects IT hardware to make up only around 7 percent of Dixon’s FY30 revenue and warns that continued favourable import rules could weaken these assumptions.
Financial and Other Highlights
Dixon Tech has reported an operating revenue of Rs 14,855 crore in Q2 FY26, representing a 29 percent growth compared to Rs 11,534 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it grew by 16 percent from Rs 12,836 crore.
Regarding its profitability, it reported a net profit of Rs 746 crore in Q2 FY26, a growth of 81 percent as compared to Rs 412 crore in Q2 FY25. Additionally, on a quarter-on-quarter basis, it grew by a staggering 166 percent from Rs 280 crore.
The company operates through three divisions, namely Mobile & Other EMS Division, Consumer Electronics & Appliances (LED TV & Refrigerator), and Home Appliances.
Mobile & Other EMS Division reported a revenue of Rs 13,361 crore in Q2 FY26, representing a robust 41 percent growth compared to Rs 9,444 crore in Q2 FY25. On the other hand, Consumer Electronics & Appliances reported a revenue of Rs 956 crore in Q2 FY26, representing a sharp 32 percent decline compared to Rs 1,413 crore in Q2 FY25. Also, the Home Appliances segment declined by 3 percent to Rs 429 crore in Q2 FY26 as compared to Rs 444 crore in Q2 FY25.
Morgan Stanley’s cautious stance on Dixon Technologies comes more from policy uncertainty in India’s IT hardware scene than from worries about how well the company runs. The company keeps showing strong financial results, but the brokerage thinks current import rules might slow down the local production growth needed for Dixon to hit its big long-term goals.
Dixon Technologies (India) Limited is a top electronics manufacturer that provides ODM and OEM services in India and worldwide. The company provides LED TVs, AC PCBs, washing machines, refrigerators, LED lighting, mobile phones, medical devices, wearables, set-top boxes, and security systems. The company also offers repair, refurbishment, and IT hardware services.
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