HSBC Upbeat On Dixon Technologies On Acquisition Move; Keeps Buy, Lifts Target

HSBC Securities maintained Buy rating on Dixon Technologies (India) Ltd. and raised its target price to 8,400 rupees from 6,550 rupees per share following the company’s move to acquire a majority stake in Ismartu India Private Ltd.

Dixon’s plan to acquire a majority stake in electronics and mobile devices manufacturer Ismartu India is a “major EPS-accretive” development, HSBC said in an investor note.

Last week, the Indian consumer electronics maker agreed to acquire a majority stake of 50.10% in Ismartu India for 238.36 crore rupees ($29 million) in cash. In addition, Dixon agreed to acquire an up to 5.90% stake in the company, subject to certain conditions.

Ismartu India has three manufacturing facilities in Noida, Uttar Pradesh under the brand name of Itel, Infinix and Tecno and it is one of the market leaders in smartphones and feature phones categories, respectively, in India.

“The development results in potentially higher assembly wallet share for Dixon and significantly improves confidence in this revenue growth opportunity panning out for Dixon over the next two years,” analysts Shrinidhi Karlekar and Sandesh Shetty wrote in the note.

The brokerage said the development coupled with a higher assumption for mobile market growth in India and further customer additions in the mobile business have led to a 15% and 30% increase in its Dixon’s revenue and net profit estimates, respectively, for FY26.

“We expect Dixon’s revenue to more than double over the next two years and profit growth to outstrip revenue growth,” HSBC said.

ACQUISITION INTRICACIES

The company will acquire a total of 1.39 crore shares, or a 50.10% stake, (Tranche 1 Shares) in Ismartu India from Singapore’s Ismartu In Pte Ltd., Transsion Technology Ltd., and 5A Advisors LLP, Dixon said in a stock exchange announcement.

The company will buy about 1.35 crore shares from Ismartu In, as well as 51,832 shares from Transsion Technology, and 346,846 shares from 5A Advisors.

The acquisition is in line with Dixon’s strategy to grow the electronics and mobile devices manufacturing business segment and to achieve strategic goals and expansion of business.

The company said the Tranche 1 Shares are likely to be acquired within 90 days, subject to approval from the Competition Commission of India.

Dixon also agreed to acquire up to 16.34 lakh shares, or a 5.90% stake, (Tranche 2 Shares), in Ismartu India from the Singapore-based firm in the financial year 2026-27, subject to the target company achieving a net profit of 200 crore rupees in FY26.

The Tranche 2 Shares will be acquired for an aggregate consideration based on a valuation of 20 times of Ismartu India’s net profit for FY26.

“The combined expertise, resources, engineering prowess and other manufacturing capabilities of both the companies will further capitalize on growth opportunities in the burgeoning Indian EMS industry…,” Dixon Vice Chairman and Managing Director Atul Lall said.

Ismartu India’s turnover stood at 6,235 crore rupees in FY23, down from 7,149 crore rupees a year earlier.

Note: $1 = 83.6092 Indian rupees

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