Dixon Technologies: The Unlikely Electronics Titan 📲

Picture this - 1993 India, a recently liberalised country bursting with potential. A businessman’s 23-year-old son returns home from London with a dream - to manufacture electronics, but for other brands!

An idea still foreign to India, this young entrepreneur borrowed Rs. 15 lakh from his father, hired 15 employees and rented a space of 10,000 square feet to make TVs.

It’s been 30 years since that risky bet, and that young boy is now on the Forbes Billionaires List, with Rs. 375 crore in profits (FY24), 22,000 employees, and 23 plants, giving its investors a 26x return in the last 7 years since its IPO!

This is the story of Dixon Technologies, a symbol of India’s manufacturing dream, crafted by Sunil Vachani. What shaped one of the largest Electronics Manufacturing Services (design, manufacture, test, and distribute electronic products) companies in the country, and what’s left in this story? What’s The Narrative?

Cut to 2025, Dixon stands tall as the largest home-grown EMS player in the country, servicing 35% of India’s LED TV manufacturing, 30% of India’s smartphone/featurephone manufacturing and the largest Original Design Manufacturer (produce the product from scratch including the design and the selection of raw material) for lighting solutions!

Over the last 3-4 years, the company has amassed other PLI contracts for mobile phones, tech hardware, telecom products and LED Lighting, expecting to record more than Rs. 1,000 crore in incentives when its FY25 results come out.

Yet, what did Dixon focus on that led to this amount of success, wherein it is being called India’s Foxconn?

Why Did The Narrative Work?

1. Explosive Revenue Growth from Mobile Manufacturing: Dixon’s strategic focus on mobile phones powered a near 50% YoY revenue surge in FY24 to Rs. 18,000 crore, with 40–50% of this driven by mobile and accessories manufacturing for top brands like Xiaomi, Samsung, and Motorola.
   

2. Operational Scale and Efficiency: The company’s aggressive capacity expansion—now at 23 plants nationwide—enabled it to manufacture 11 million smartphones and 26 million feature phones in just the first nine months of FY24 (making up for 10% of demand each), while new facilities like the Dehradun washing machine plant further diversified revenue streams and created over 1,000 jobs.
   

3. Policy Tailwinds and Market Leadership: Dixon capitalised on India’s production-linked incentive (PLI) scheme, making up 1/7th of the incentives being offered under its EMS space, and securing major export and domestic contracts, driving a 160% stock price rally in a single year post that.
   

Coupled with its unique ability to form partnerships, like in the example of the acquisition of Ismartu (mobile headset manufacturer) and the JV with Airtel (to manufacture mobiles and other telecom products for Airtel customers), it simultaneously expands capacity and its addressable market to tap into new revenue sources, while maintaining its vision - to be among the largest EMS manufacturers in the world!

But has this story reached its climax, or is there more juice left in the narrative?

Where Is This Narrative Heading?

Apart from the fact that this business “rewards” the company with less than 5% in net profit margins, there seem to be a few red flags that might bring a plot twist to the Dixon narrative:

1. PLI Slowdown - The yearly smartphone consumption in India has remained in the 140-160 million range over the last few years, with Dixon banking on the PLI scheme to satisfy a huge chunk of it, but this scheme ends by March 2026, making people antsy about how Dixon will sustain the high growth it has seen since it became a PLI company (5x growth in revenue and profits in 3 years).
   

2. Export Let-down - Players like Tata Electronics and Samsung are eating up the export space in electronics manufacturing, with Dixon not being able to scratch it just yet, and still tending to import substitution. For context, India exported US$ 17 billion worth of smartphones in the last 10 months, and Dixon contributed to a mere 2% of that!
   

3. Expensive Valuations - With each stock being priced at Rs. 15,300 levels, the company trades at a 1-year Forward PE multiple of 85x - its peers trade at less than half of that, leading people to believe that the climax has passed, and this is the beginning of the end of Dixon’s reign as a multi-bagger.
   

Coupled with an over-reliance on smartphones for revenue (85% concentration), the fears do seem valid, but there might be a possibility for the hero to make some moves before the story takes a turn for the worse.

The Way Ahead

All said and done, Dixon has nailed the EMS play, delivering higher profit margins and capital efficiency than its global competition:

Bear in mind, it is 3% of the scale of Pegatron’s business and less than 1% of Foxconn’s, proving that it knows what it is doing. Furthermore, its plans to become an EMS giant don’t end here. The next step - backwards integration.

Dixon is planning to set up a US$ 3 billion plant to manufacture/fabricate displays for its electronics products. This makes up for 70% of the cost of an electronics device, a component it had been buying, but will now produce in-house to save costs and complete the value chain internally.

With the India Semiconductor Mission 2.0 offering subsidies for the same, Dixon plans to become a huge beneficiary, owing to the phenomenal success it received being the poster child for the EMS PLI scheme, thereby officially becoming one of the world’s most efficient EMS companies!

Coupled with the plan to export 3 million smartphones a year going forward (making Rs. 1,800 crore in annual revenue), Dixon will not back down from a fight.

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