Indian electronics contract manufacturer Dixon Technologies had its share price jump by almost 5% to its highest ever recorded on December 16, 2024. This achievement has emerged after the company signed a JV with a Chinese based smartphone manufacturer Vivo lifting its standing as a leader in the electronics manufacturing segment.
This JV will give Dixon the opportunity to produce Vivo d smart phones while also agreeing to OEM order for other brands as well.
The JV is designed such that Dixon Technologies will own 51% of the lot while Vivo India will own 49% of the lot. In their statements, the companies mention that Dixon will be able to handle a large part of Vivo’s OEM orders in India apart from manufacturing electronics for other brands.
According to the CEO of Vivo India Jerome Chen, "The proposed joint venture will effectively complement Vivo India’s current manufacturing operations and enhance our OEM capabilities."
Similar thoughts were seconded by Atul B. Lall, Vice Chairman and Managing Director of Dixon Technologies. "This association will bolster our manufacturing excellence and Vivo’s leadership in the Indian business ecosystem. We are excited to create a stronger and future-proof organization."
The agreement, pending regulatory approval and signing, meets with the Indian government’s desire that Chinese companies partner with Indian firms to bolster operations on the subcontinent.
It appears to facilitate operation by Indian entities, enhance compliance and spur industry growth within India’s equity market particularly within the electronics sector.
Dixon shares opened at ₹18,212 on the NSE, higher than the previous close of ₹17,954.40. The stock quickly climbed to an intraday high of ₹18,830 before settling at ₹18,687.70 as of writing, a 4.08% gain. With this surge, the company market cap crossed the ₹1.1 trillion mark.
The share price has rallied an impressive 190% in 2024, outperforming benchmarks such as the S&P BSE Sensex, which gained 13% year-to-date. Over a longer horizon, Dixon’s stock has delivered staggering returns of 2,548.97% over the past five years, compared to the Sensex’s 99.23%.
Dixon’s stock had previously touched levels of ₹20,000 in 2021, prior to a stock split that divided one share of ₹10 into five shares of ₹2 each. The company has continued to deliver strong performance despite market fluctuations, marking 2024 as one of its best calendar years since listing in 2017.
The joint venture with Vivo, is believed to be a mutual success for both organisations. For Vivo, it is in line with India’s regulation to increase local stakes in operations while for Dixon, it expands their market segment offering and increases its production capability to address high turnover niches.
Dixon already assembles smartphones for Samsung, Xiaomi, Motorola, Oppo, Transsion, Google, and Nothing. Including Vivo in the list of its clients is a key in enhancing its authority in the smartphone manufacturing industry. Also, the fact that JV has agreed to work with OEM business for other brands can also be looked at as a strength for Dixon as the company gradually shows versatility.
This stock continues to be bullish despite the fact that it has moved into the overbought territory by a daily RSI reading of 82. This might mean the share is overdue for a bearish pullback before continuing with the bullish run for sometime.
Key support levels are at around ₹17,125 and ₹15,900. These two levels offer a potential entry point, if the stock shows buy confirmations in any of the two levels. This will be the key levels to watch for investors looking to capitalize on the bullish movement.
Out of the 31 analysts who have issued Dixon Technologies’ stock recommendations, 15 have given the stock a “buy” rating, seven have put it a “hold” rating and nine have given it a “sell “rating . The consensus suggests a drop of 21% after this year’s spike. Still, the fundamentals, the new order book and its steadily increasing number of customers make a long-term investment in Dixon more than worth it.
The joint venture of Dixon Technologies with Vivo is a turning point for the company for elaborating its position as the electronics manufacturing specialists. The strategic partnership aligns with India’s regulatory framework and promises to create new opportunities in the OEM space. While the stock’s current bullish trend may see short-term corrections, its strong growth trajectory and industry leadership position it for continued success.