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Shares of Dixon Technologies (India) Ltd. witnessed a remarkable surge of 10% on Friday, May 17, reaching a record high of ₹9,062 on the National Stock Exchange (NSE). This significant uptick followed an upgrade in the stock's rating by global brokerage firm Morgan Stanley, from 'underweight' to 'equal-weight'.
Morgan Stanley's positive outlook on Dixon Technologies is primarily driven by its forecast of a robust 42% compound annual growth rate (CAGR) in earnings during the period FY24 to FY28. This optimistic projection has instilled confidence in investors, contributing to the stock's impressive performance.
However, analysts remain divided in their opinions about Dixon Technologies. While 60% of analysts covering the stock maintain a 'buy' rating, a sizable 26% have issued 'sell' ratings, indicating a cautious stance among some market observers.
Dixon Technologies' recent financial performance has been mixed. The company missed estimates for the January-March quarter, with margins declining by 110 basis points year-over-year. This decline is attributed to an increase in the share of low-margin mobile and EMS businesses.
Despite the mixed financial results, Morgan Stanley remains positive about Dixon Technologies' long-term prospects. The brokerage highlights the company's onboarding of large mobile customers in the last six months and its plans to invest $30 million in manufacturing display modules for mobiles as key growth drivers.
Dixon Technologies has delivered impressive returns to investors, with nearly 40% gains year-to-date and a remarkable 200% return over the past year. The company's strong performance has attracted attention in the market, and the recent upgrade by Morgan Stanley is expected to further boost investor confidence.
In conclusion, Dixon Technologies' shares have surged on the back of Morgan Stanley's upgrade, reflecting the brokerage's positive outlook for the company's earnings growth. However, analysts remain divided in their assessments, with some expressing concerns about delivering guidance and sustaining low working capital. Despite these concerns, Dixon Technologies continues to attract investor interest, and its long-term growth prospects appear promising.