Shares of Dixon Technologies fell sharply by 7.50% to trade at ₹16,241.75 during early hours on January 21, 2025, following the release of the company’s Q3 FY25 financial results.
Despite impressive growth in revenue and profits, the market reacted negatively, mirroring a similar pattern observed after the company’s Q2 results.
Dixon Technologies reported a remarkable 117% year-on-year increase in revenue, reaching ₹10,461 crore. Profit After Tax (PAT) also surged by 124% to ₹217 crore.
The company’s operational performance showed resilience, with the PAT margin improving to 2.1%, up by 10 basis points from the previous year.
However, the EBITDA margin slipped slightly to 3.8%, a 10-basis-point decline compared to the previous year.
The dip in EBITDA margin, coupled with concerns over the composition of revenue streams, may have triggered the sell-off.
Investors appear cautious about the increased contribution of the lower-margin mobile division to the overall revenue mix. Analysts noted that despite the company’s robust topline and bottom-line performance, the pressure on margins remains a critical point of concern for stakeholders.
This isn’t the first time Dixon Technologies has faced such market reactions. In October 2024, after posting a 133% revenue growth to ₹11,528 crore for Q2 FY25, the company’s shares fell by nearly 10%.
Analysts then attributed the decline to a contraction in EBITDA margins, which stood at 3.6% compared to 4% the previous year.
“The strong revenue growth reflects Dixon’s expanding market presence and operational scale. However, the continued pressure on EBITDA margins highlights challenges in maintaining profitability amidst a shifting product mix,” said an industry analyst.
While the company’s fundamentals remain strong, the market’s focus on margin trends underscores the need for Dixon Technologies to address investor concerns.
Sustained improvement in high-margin segments and operational efficiencies could help restore confidence in the stock.
Despite the current volatility, Dixon Technologies is well-positioned to capitalize on opportunities in the electronics manufacturing space.
The company’s ability to navigate margin pressures and maintain growth momentum will be critical in determining its long-term market performance.
Investors will be keenly watching the company’s strategic moves in the coming quarters to assess its ability to strike a balance between growth and profitability.
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