Dixon Technologies con call was today at 4:00 PM.
"Company will be focusing on expenditure in R&D and disciplined capital allocation for future growth"
Here are the key takeaways of the call. 😀
@sonalbhutra @drprashantmish6 @varinder_bansal @Milind4profits @gvkreddi
🧵👇
"Company will be focusing on expenditure in R&D and disciplined capital allocation for future growth"
Here are the key takeaways of the call. 😀
@sonalbhutra @drprashantmish6 @varinder_bansal @Milind4profits @gvkreddi
🧵👇
Opening remarks
- Company had a good all around performance with highest sales.
- Growth of 120% in revenue
- EBITDA had a robust growth of 89%.
- Growth has been broad based.
- order book continues to be very strong.
- Growth is reflected across businesses.
- Company had a good all around performance with highest sales.
- Growth of 120% in revenue
- EBITDA had a robust growth of 89%.
- Growth has been broad based.
- order book continues to be very strong.
- Growth is reflected across businesses.
- Overall demand outlook remains positive
- Due to global trade mismatch in commodity prices resulted in higher input cost and disturbed supply chain
- It could disturb the ODM revenue a bit
- Due to global trade mismatch in commodity prices resulted in higher input cost and disturbed supply chain
- It could disturb the ODM revenue a bit
- Company is well positioned with robust balance sheet with good cash position.
- Company is focusing towards investing in people and R&D
- Company is extremely focused towards disciplined capital allocation
- Company is focusing towards investing in people and R&D
- Company is extremely focused towards disciplined capital allocation
LED
- govt regulation has helped in growth.
- Company did well in this segment because of backward integration, operating leverage & sales of larger size tv.
- 4.4 million capacity that is 30% of India's total requirement
- Company is expanding its capacity to 5.5 millions
- govt regulation has helped in growth.
- Company did well in this segment because of backward integration, operating leverage & sales of larger size tv.
- 4.4 million capacity that is 30% of India's total requirement
- Company is expanding its capacity to 5.5 millions
- Lighting
- Within a short span of time company has recached back to pre-covid levels.
- margins expanded to 9.5%
- Solutions for smart lighting segment and emergency lighting.
- Order book is very healthy thus company is expanding the capacity further more
- Within a short span of time company has recached back to pre-covid levels.
- margins expanded to 9.5%
- Solutions for smart lighting segment and emergency lighting.
- Order book is very healthy thus company is expanding the capacity further more
- Decorative lamp capacity has been expanded.
- Company is setting up a new factory for lighting and will be operational by Q3 of next fiscal year.
- Company has started exporting to US & Indonesia.
- Company is in talks with very large retailer internationally.
- Company is setting up a new factory for lighting and will be operational by Q3 of next fiscal year.
- Company has started exporting to US & Indonesia.
- Company is in talks with very large retailer internationally.
- The team is developing household lighting solution
- Company is looking to venture into international markets
- Global market is 8 billion dollar. Company is globally no.2 or 3 manufacturer.
- Company is looking to venture into international markets
- Global market is 8 billion dollar. Company is globally no.2 or 3 manufacturer.
Washing machine Business
- Margins would be under some pressure this quarter
- Order book remains very high thus, company is going to expand the capacity of semi automatic in Dehradun.
- Tirupati plant is almost complete
- Margins would be under some pressure this quarter
- Order book remains very high thus, company is going to expand the capacity of semi automatic in Dehradun.
- Tirupati plant is almost complete
Mobile Phones
- Revenue grew by 114%
- commercial production has started for Nokia
- commercial production for Motorola will start soon
- The new factory under PLI scheme is being constructed.
- The annual capacity for smartphone would be 20 million
- Revenue grew by 114%
- commercial production has started for Nokia
- commercial production for Motorola will start soon
- The new factory under PLI scheme is being constructed.
- The annual capacity for smartphone would be 20 million
- From this quarter company would start reporting the revenues of this vertical separately
- Company has the largest capacity for 2g phones which is used for domestic and export sales
- ROC will be robust and there will be quick payback on the project.
- Company has the largest capacity for 2g phones which is used for domestic and export sales
- ROC will be robust and there will be quick payback on the project.
- Company is seriously considering backward integration in Chargers, batteries & mechanics
Medical electronics
- Healthy operating margin with very high level of ROCE
- Company has entered into wearables segments
- Reverse logistics segment: Mainly for set up boxes and LED TV
Medical electronics
- Healthy operating margin with very high level of ROCE
- Company has entered into wearables segments
- Reverse logistics segment: Mainly for set up boxes and LED TV
- Motorola business is going to be mainly for international market.
- 4-5 years is good enough time for government to support the manufacturing industry that is in nascent stage.
- Company will do business in segments that are not in PLI scheme as well
- 4-5 years is good enough time for government to support the manufacturing industry that is in nascent stage.
- Company will do business in segments that are not in PLI scheme as well
PLI scheme
- Nokia and Motorola are the first 2 customers that the company has finalized.
- The order made by Motorola is almost exceeding the govt ceiling.
- Motorola production is to cater the global markets
- Due to PLI there would be deepening of manufacturing in India
- Nokia and Motorola are the first 2 customers that the company has finalized.
- The order made by Motorola is almost exceeding the govt ceiling.
- Motorola production is to cater the global markets
- Due to PLI there would be deepening of manufacturing in India
- Samsung has a good relationship with Dixon. The company is producing 2g smartphones
- Samsung is eligible for PLI scheme in smartphone business
Pli scheme
- Due to supply chain constraints the company will not be able to meet the thresholds
- Samsung is eligible for PLI scheme in smartphone business
Pli scheme
- Due to supply chain constraints the company will not be able to meet the thresholds
- Other competitors would also not be able to achieve the threshold
- Next year threshold will be met fairly faster.
- issue is not with order book. issue is with supply chain management.
- Next year threshold will be met fairly faster.
- issue is not with order book. issue is with supply chain management.
- Market has shifted from 32 inches to 43 inches which has led to expansion in revenue and margins.
- Company has added smasung, flipkart's private label, Reliance's private label and tata croma for sales
- Almost 75% of revenue are coming from Xiaomi and Samsung in LED TV
- Company has added smasung, flipkart's private label, Reliance's private label and tata croma for sales
- Almost 75% of revenue are coming from Xiaomi and Samsung in LED TV
- This revenue from top 2 customer will get lower to 65% with more customer acquisition
Motorola partnership
- By year 3 or year 4 the company would be catering the 30-40% of Motorola's demand. The China production is mainly being shifted to India
Motorola partnership
- By year 3 or year 4 the company would be catering the 30-40% of Motorola's demand. The China production is mainly being shifted to India
- Dixon has passed the the level 1 quality audit & the commercial production will start by next quarter.
- Lower Cost would be achieved by the company.
- Nokia production would be for domestic market.
- Lower Cost would be achieved by the company.
- Nokia production would be for domestic market.
- Company is in talks with another large mobile brand for smartphone manufacturing.
Backward integration
- Company is not looking for backward integration in terms of PCB
Backward integration
- Company is not looking for backward integration in terms of PCB
Capex
- Lighting side: Capacity would be coming in Uttarakhand
- PLI week of lighting would be announced by 2nd week of feb and the company would be applying for that.
- 104 crores Capex has been done till now for washing machine and Pli project
- Lighting side: Capacity would be coming in Uttarakhand
- PLI week of lighting would be announced by 2nd week of feb and the company would be applying for that.
- 104 crores Capex has been done till now for washing machine and Pli project
Volumes
Consumer electronics volume has been 200%
- Washing machine 2.4 lacs
- 75 lac for mobile phones
- Cctv 9lac
- Setup box 9 lac
- Medical equipment 450 units
- Talent acquisition
- Strengthen the HR department
Consumer electronics volume has been 200%
- Washing machine 2.4 lacs
- 75 lac for mobile phones
- Cctv 9lac
- Setup box 9 lac
- Medical equipment 450 units
- Talent acquisition
- Strengthen the HR department
- Strengthen middle management team in design, manufacturing, quality management system.
- Have tied up with global consultant in this talent management
- Company is strengthening the IT segment
- Have tied up with global consultant in this talent management
- Company is strengthening the IT segment
New opportunity for PLI
- Company is looking for IT and wearables PLI.
- For IT the company has a good relationship with a very large brand.
- cost and productivity is better in India than in Vietnam.
- Company is looking for IT and wearables PLI.
- For IT the company has a good relationship with a very large brand.
- cost and productivity is better in India than in Vietnam.
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