Dixon Technologies stock weighed down by competition worries

Increasing competition in the electronics manufacturing services (EMS) industry is impacting valuations.

- DEVANGSHU DATTA

Market leader Dixon Technologies (India) has been hit hard though it remains the leader in an industry with strong growth.

Listed players such as Kaynes Technology, Avalon Technologies, Syrma SGS Technology, Cyient DLM, Data Patterns, Dixon, and Amber Enterprises have all seen some price correction. This comes despite orders from aerospace, industrials, automotive, and infrastructure sector clients.

Increasing competition has led to investors pulling back valuations. EMS players have big capex plans driven by policies like production-linked incentive scheme (PLI). The aggregate order book of the seven companies mentioned above saw growth rates of over 20 per cent year-on-year (Y-o-Y) in March 2025.

In aggregate, the industry may log 30 per cent growth rates in revenue and earnings before interest, taxes, depreciation and amortisation (Ebitda) but margins may move lower.

Dixon has a healthy order book, and its anchor customer (Motorola) is ramping up export volumes to North America. Order inflows from Xiaomi and Longcheer have also risen.

Dixon is constructing a 1 million sq. ft. mobile manufacturing facility and a display module plant, and plans to double capacity. Over time, it will invest $3 billion in capital expenditure (capex).