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Dixon Technologies hit 52-week high after arm bag contract from Lenovo

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India’s second-largest mobile phone maker, Dixon Technologies, has been in the news in recent times after it delivered a number of positive news stories leading to the breakout of stock from its 2021 high. Today, on December 12, the stock made a gap-up opening following the news that a subsidiary of Dixon Technologies, Padget Electronics, has won a contract from Lenovo to manufacture its laptops and notebooks under the IT hardware production-linked incentive (PLI) 2.0 scheme.

For Dixon, the agreement from Lenovo will be crucial, as the company has already been manufacturing notebooks for Acer in the segment. The partnership with Lenovo is a direct outcome of participation in the Production-Linked Incentive (PLI) 2.0 scheme. The PLI 2.0 scheme aims to boost domestic production and incentivize manufacturers to scale up their capabilities, aligning with the government's vision of a self-reliant and technologically advanced nation.

Atul B. Lall, Vice Chairman and Managing Director of Dixon Technologies (India) Limited, said that Lenovo will bring global know-how and processes to manufacture IT hardware products, and Dixon is delighted and encouraged by the trust Lenovo has placed in Dixon for the association. He believes that this partnership will leverage Dixon's excellence and superior execution track record and represent a major milestone in the Indian government's "Make in India" initiative.

In an earlier week, Padget Electronics announced the launch of its smartphone manufacturing facility in Noida, Uttar Pradesh, dedicated to producing devices for global technology giant Xiaomi. The Noida plant is built across 2.7 million square feet and has an annual capacity of 25 million units.

In early December, Executive Chairman Sunil Vachani of Dixon said that the electronics manufacturing services firm is expected to close the current fiscal year with a revenue of around Rs 19,000 crore. The company plans to double its headcount over the next two years, with growth from 1,700 people to 27,000 people in just 5–6 years. Mr. Vachani said the company now has an annual smartphone production capacity of 70 million and is in the process of setting up the next mobile manufacturing unit, which will be spread over 10 lakh square feet. The company has 17 manufacturing facilities totalling 2.5 million square feet, with plans to expand to 23 facilities by FY 2024. Dixon Technologies has outlined a capex of Rs. 500 crore for fiscal 2024, with lower spending in the next year due to a large portion of the capex spending being front-ended.

Dixon Technologies Ltd. is the world's fourth-largest LED lamp producer and India's largest LED lamp manufacturer. The company holds a market share of 35% in LED television production, 30% in washing machines, 25% in security surveillance systems, and 50% in lighting solutions.

Dixon Technologies made a 52-week high intraday, and at the time of reporting, the stock was trading 3% up at Rs. 6564. The stock has delivered a 1-month return of 25% and a YTD return of 68%.

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