Analyst Concall
Mobile phone demand may slow down post Diwali - Dixon Tech
This story was originally published at 23:18 IST on 24 October 2024
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--Dixon Tech: Sold 8.1 mln smart phones in Jul-Sept
--Dixon Tech: Avg mobile pricing INR 6,000 for Xiaomi, INR 9,000 for Oppo
--Dixon Tech: Seeing buoyancy in mobile segment order book
--Dixon Tech: Demand for mobiles seen slowing slightly after Diwali
--Dixon Tech: In advanced talks with large electronics customer
--Dixon Tech: Saw significant ramping up in telecom business
--Dixon Tech: Telecom segment order book looks extremely healthy
--Dixon Tech: Got INR 700 mln production-linked incentive in Jul-Sept
--Dixon Tech: Got INR 1.20 bln production-linked incentive in Apr-Sept
--Dixon Tech: Funding Ismartu acquisition led to higher finance cost
--Dixon Tech: See $800 mln-$900 mln opportunity in components business
By Ayushman Mishra and Anjana Therese Antony
MUMBAI – Dixon Technologies India Ltd. expects the demand for mobile phones to slow down slightly after Diwali, but may recover and "possibly become better" from Jan-Mar, the company's management said in a post-earnings call with analysts Thursday. The electronics manufacturing services company also said it expects buoyancy in the mobile segment's order book. "We will be a very large player, possibly the largest in the sector as far as contract manufacturing is concerned," the management said.
The revenue from Dixon Technology's core mobile and electronic manufacturing services segment surged 235% on year to INR 94.44 billion in Jul-Sept. This segment contributed a whopping 82% to the company's revenue during the quarter, much higher than the 57% contribution a year ago. This includes a revenue of INR 6.60 billion from telecommunication customers. The company said the telecom segment saw a significant ramp-up of orders and that its order book looks extremely healthy.
The Noida-based company said it sold 8.13 million smartphones in the September quarter, which is nearly six times growth compared to the year-ago period. It also sold 9.1 million feature phones in the latest quarter as compared to 8.3 million a year ago. Dixon is the largest manufacturer of smartphones, the management said, adding that the March quarter "is going to be very good." Asked about pricing, the company said the average price for Xiaomi is INR 6,000 and for Oppo is INR 9,000.
Asked about client additions, the management said the company is in advanced stages of discussion with "a large industrial electronics customer", adding that it is confident the electronics business "is going to mature". The company also sees an opportunity of $800 million-$900 million in the components segment.
Also, the information technology hardware division's margin profile is expected to be similar to that of the mobile division in a couple of years. Dixon Technologies is also looking to deepen its level of manufacturing and "get into precision components, mechanicals and camera modules, and the same is under deep study," the management said.
When it comes to its recently-acquired subsidiary, Ismartu India, the company said its revenue would be between INR 70 billion and INR 75 billion in the current financial year. Ismartu India's revenue during the September quarter was INR 11.11 billion. In August, Dixon Technology acquired a 50.1% stake in Ismartu India for INR 2.76 billion, leading to a rise in its finance costs, which more than doubled on year to INR 379.3 million during the quarter.
The management further said the company received INR 700 million as production-linked incentives in Jul-Sept and INR 500 million in the previous quarter. It also said such incentives are an added lever for the company's growth. "PLI on component is not for enhancing the competitiveness for servicing domestic market...it is required because the Indian industry still needs some support in this category," it said.
For the quarter ended September, the company posted a 263% on-year growth in consolidated net profit to INR 3.90 billion and 133% rise in revenue to INR 155.34 billion. This was much higher than the profit of INR 2.16 billion and the revenue of INR 94.42 billion expected by the Street. The company released its quarterly results after market hours on Thursday and the stock closed 1.5% lower at INR 15,055.30 on the National Stock Exchange. End
US$1 = INR 84.08
Edited by Tanima Banerjee
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