Dixon Technologies Expects Margins Growth in FY26 and FY27

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Dixon Technologies forecasts an improvement of 120-130 basis points in operating margins for FY26, with expectations for higher growth in FY27 after the full ramp-up of its new component business. The management anticipates compensating for the loss in PLI sops post the scheme’s conclusion next year.

In Q1FY26, revenues from Dixon’s mobile business surged by 125% year-on-year to ₹11,663. Operating profit also witnessed a growth of 131% year-on-year to ₹395 crore, with the mobile segment contributing 91% to the total revenue of ₹12,838 crore.

Despite a slight decline by 10 basis points in EBITDA margins to 3.8% in the quarter ending June 2025, the net profit for the same quarter doubled year-on-year to ₹280 crore.

The contract manufacturer plans to commence the production of camera modules and display assemblies by the fiscal year’s end, including precision mechanical components in the subsequent fiscal year as part of the government’s ₹22,000 crore electronics component manufacturing initiative, as per Dixon MD Atul Lall’s announcement during an earnings call on Tuesday.

Dixon projects a capital expenditure of ₹750-800 crores for its camera modules and display assembly operations in FY26, along with an additional ₹300-400 crores for expanding capacities in its core EMS business.

The company is in the process of acquiring a majority stake in the India operations of Kunshan Q-Tech Microelectronics, one of the top five camera module manufacturers worldwide, for ₹400 crore. Additionally, a joint-venture with HKC for display assembly is underway, with a facility expected to be operational within the next 45 days, Lall revealed.

Notably, the approvals for the joint ventures and acquisitions are awaiting clearance under the government’s press note 3, which necessitates ministerial approval for investments from neighbouring nations, particularly China, although Lall expressed confidence in the ongoing approval process.

Dixon foresees a 15% sequential growth in orders preceding the festive season, along with an increase in export volumes for its key client, Motorola, to the United States. The company is also engaged in negotiations for a substantial export opportunity with another global brand, as stated by Lall.

If the export deal materializes, the projected exports for the current year are expected to reach ₹7000 crore, a significant rise from ₹1600 crore in the previous fiscal. Lall envisions exports soaring to ₹11,000 crore by FY27.

Moreover, Dixon has initiated exports to Africa, identifying a lucrative market that aligns with its cost objectives.

Lall explained that although the ASP for exports mirrors domestic rates, there are initial investment requirements to meet the ramp-up needs for exports, resulting in higher costs initially but similar margin levels eventually.

As part of its expansion into new sectors, Dixon is bolstering its senior management with skilled professionals. The company appointed a Vice President of Strategy and Digital Transformation, along with another executive to lead the component business. Lall highlighted the recruitment of an industry expert from Taiwan to oversee the display manufacturing division and a Korean specialist to manage R&D for washing machines and appliances.

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