Dixon meets Q2 revenue target, bets on components to fuel growth
The Noida-based company’s operating revenue increased by 15.7% sequentially and 33% annually. ₹14,855 crore in the second quarter of FY26, as per their filing. Dixon met executive vice president and general manager Atul Lall’s June quarter revenue growth target of 15%.
The company’s profitability increased by 167% and 81% respectively compared to the previous year. ₹746 crore. However, this was largely due to Dixon selling past manufactured goods in the September quarter.
Change in the company’s finished product stocks caused losses ₹413 crore sold in June quarter ₹297 million crore of unsold goods during July-September period, leading to an increase in profits.
Although Lall did not offer guidance for future quarters during the post-earnings conference call with analysts, he expressed confidence in the company’s effort to increase margins and manage a slowdown in orders from Motorola, Dixon’s main customer.
Joint ventures, diversification plans
“Some of our components-related joint ventures, such as Q Tech for camera modules, are already starting to generate revenue as they operate factories. Others, such as display modules, will start adding revenue by the end of this fiscal year or in the first quarter of the next fiscal year,” Lall said.
“Overall, we expect displays, mechanical products, power supplies and other components to represent a $12 billion net addressable industry in India with usable margins of around 8% over the next two fiscal years,” he said. “Of these, Dixon’s revenue opportunity could be around $1.5 billion ( ₹13,000 crore per year).”
Lall also added that each of Dixon’s four joint ventures announced during the September quarter will begin adding revenue from FY27.
“Among component production, we expect component supply for 60 million smartphones by volume to generate $600 million in annual revenue. Similarly, we expect to see $100 million in revenue growth from laptops, plus another $60 million from television display production and $140 million from automotive display production, all of which will add up to at least $900 million ( ₹8,000 crore in the next two years),” Lall said.
“All of this will contribute to our margin expansion as we move deeper into the electronics manufacturing ecosystem.”
The diversification game is currently being played piecemeal. Revenue from telecom equipment such as Wi-Fi routers increased by 116% sequentially ₹3,045 crore in September. Lall said the company will actively seek enterprise-level networking product customers.
Risks and strategic moves
But Dixon’s growth opportunity does not come without risk. Revenue from pure-play mobile phone production fell 5% sequentially ₹Mobile phone revenue stood at Rs 9,312 crore despite a 130% sequential increase from Dixon subsidiary Ismartu, which makes phones for China-based Transsion Holdings. This clearly reflected a slowdown in phone production by Motorola, Dixon’s Chinese-owned consumer electronics brand.
Lall said Vivo will be Dixon’s important customer for this business. “However, we hope that both Vivo and Motorola will be two major clients for Dixon, rather than just one.”
The company also said it is negotiating a deal with a major US-based original design manufacturer (ODM) and details could be signed by the end of this financial year.
Analysts have previously highlighted the risk of Dixon being dependent on single large customers for a large portion of its revenue; for example, Ismartu accounted for just 31% of Dixon’s quarterly revenue in the second quarter.
Dixon announced four partnerships during the September quarter: a 51:49 joint venture with China’s Kunshan Q Tech Microelectronics for camera, display and fingerprint modules; 74:26 joint venture with Chongqing Yuhai for precision components of laptops and mobile phones; 50:50 joint venture with Signify Innovations (formerly Philips Lighting) to manufacture LED lights and accessories; and entering battery production through wholly owned subsidiary Dixon Electrocorp.
Harshit Kapadia, vice president of Elara Capital, said, “We are hearing about the possibility of a smartphone production incentive plan based on export targets in the works at the center. If such a plan comes true, it will work very well in Dixon’s favor.”
“The current short-term risk is that Chinese smartphone brand Xiaomi’s market share in India will decline, which could impact Dixon’s earnings from its largest revenue-generating segment,” Kapadia said. “But other than that, Dixon remains on a steady path despite its dependence on premium brands.”
