Dixon Tech rises 3% as CLSA maintains 'Outperform' despite concerns: Analysts say EMS demand still intact
The shares of Dixon Technologies (India) rose around 3 percent on December 12 after international brokerage CLSA maintained its 'Outperform' rating on the stock and a target price implying strong upside potential from current levels.
Dixon Tech shares closed at Rs 13,365 apiece on Friday, extending gains for the second consecutive session. This comes after the stock declined more than 23 percent in less than a month, partly due to the rub-off effect from peer Kaynes Tech's selloff.
CLSA on Dixon Tech:
CLSA maintained its 'Outperform' rating on the stock with a target price of Rs 18,800 per share. This implies an upside potential of nearly 45 percent from the stock's previous closing price of Rs 12,988 per share.
The international brokerage said that the stock's 17 percent fall over the past one month was largely driven by concerns about possible cuts to its earnings per share (EPS) estimates for FY27.
CLSA noted that Dixon is still awaiting approvals for its joint venture with Vivo. Additionally, the company has not yet received approvals for components facilities under Indian government's Electronic Components Manufacturing Scheme. It added that the firm's medium-term growth prospects also remain unclear as smartphone market share in India has saturated.
Despite these concerns, CLSA said that the stock's valuation of 44x as of September 27 earnings is "undemanding", and prices in all the concerns.
What lies ahead for EMS stocks?
Dixon Tech shares have fallen more than 4 percent in the past five days, and around 13 percent in the past one month. The stock is down nearly 26 percent in 2026 in 2025 so far.
The recent sharp decline in EMS stocks came after Kotak Institutional Equities raised concerns over inconsistencies in Kaynes Tech's related-party disclosures.
The sharp correction in Kaynes Tech has sent a sentiment shock for the broader EMS pack. When a sector leader stumbles, the market quickly questions whether similar pressures—valuation stretch, order-flow uncertainty, or execution risks — may spill over to others, said Ravi Singh, Chief Research Officer at Master Capital Services.
"That explains why Dixon (which fell more than 17% this month), and Syrma-SGS have seen short-term volatility even without stock-specific negatives," he further said, adding that the space may split into two groups going forward. "Well-capitalised players with diversified clients, like Dixon and Amber, should stabilise first as their demand pipelines remain intact,” he said, adding that structurally, EMS demand in India has not changed.
Kalp Jain, Research Analyst at INVasset PMS, also said that despite the recent correction, the underlying sector drivers remain unchanged. "Domestic electronics production continues to expand, supported by rising consumption, ongoing capacity additions and policy incentives. The outlook from here will depend on how quarterly results shape up, particularly in terms of order visibility, utilisation rates and margin stability. If operating performance remains steady, sentiment may gradually stabilise, although near-term volatility is likely to persist as the market reassesses valuations after the recent run-up," he added.
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