Dixon Technologies: Brokerage Views & Run up to IPO

dixon technologies IPO views
This post on Dixon Technologies Limited IPO tries to bring out consolidated brokerage views opinions, IPO Review / Analysis, Note/ reports and recommendation of brokerages , Analyst, Business New papers, Management views, information on Anchor investors, Subscription etc on Dixon Technologies IPO and shall be updated continuously till the closure of the issue. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Dixon Technologies Limited IPO or not.

Dixon Technologies IPO: Allotment Status Click Here

Related Posts:  Dixon Technologies IPO Review
Dixon Technologies IPO: Grey Market Premium etc.

04/9/17 Grey Market Premium Rs. 500+  ,  Kostak (Appl. rate) –  450-500,  

Subscription: Dixon Technologies IPO  ( x times)
  QIB NII Retail Total
Day 3  134.66  345.61  10.6  117.83
Day 2    8.93    0.31 3.27   4.25
Day 1   1.34 0.04  0 .78 0.78

Complete Anchor List

Ahead of its IPO, Dixon Technologies has raisedRs 179.8 crore by allotting 10.18 lakh shares to anchor investors at the higher end of the IPO price band of Rs 1,760-Rs 1,766 per share. The Anchor investors include Seadview Capital Mauritius, HDFC Small Cap Fund, DSP Black Rock Micro Cap Fund, Goldman Sachs India Fund, Kuwait Investment Authority Fund, HSBC Indian Equity Mother Fund, Franklin Templeton Mutual Fund and Nomura Funds Ireland were among the anchor investors. Complete Anchor List of Dixon Technologies IPO

Consolidated opinion of Brokerages, Analysts, Business New Paper Reports, Management Views on Dixon Technologies IPO .

Prabhudas Lilladher: “We believe DTIL is a good proxy play on fast growing consumer electronic market in India. Strong focus of government on import substitution should mean favourable policy environment. Strong market potential, strong customer relationship, increasing product basket and improving mix should ensure healthy growth in sales and profitability. At the upper end of the issue price, the post money market cap works out to be ~Rs20bn and DTIL will trade at 40xFY17 earnings. We recommend “Subscribe” with a medium/long term perspective. ” 

Angel Broking: “DTIL would continue to report higher revenue and improvement in margins owing to its presence in high growth segments, experienced management and growing share of ODM segment. Despite the company operating on thin margins, it has registered return on capital of a whopping 33.3% in FY2017. Further, it has been generating positive cash flow from operations over the last 5 years and negligible debt post IPO. At the upper end of the price band, the pre issue P/E multiples works out be 38.5x of FY2017 EPS, on P/B, it is valued at 9.8x of FY2017 book value. We recommend ‘SUBSCRIBE’ on the issue for a mid-to-long term period.”

Asit C. Mehta Investment Intermediates -Analyst View “ At the upper price band of Rs 1766/-, the company’s stock trades at 38.6x its FY17 EPS of Rs. 45.86/-, which is priced. Hence, we recommend to SUBSCRIBE the issue from a long-term perspective.”

Antique Stock Broking-Analyst view “Outlook for Dixon appears bright as the Indian consumer durables market is expected to see strong growth with 17% CAGR between FY16-20 on the back of (1) low penetration levels, (2) easy financing schemes and (3) expansion of delivery models, including e-commerce.”

Religare: “
Dixon’s financial track record has been encouraging with its net revenue,
operating profit and PAT having grown by 33.8%, 45.7% & 78.2% respectively over FY13-17. The company enjoys healthy return ratios (ROCE: 33.9% in FY17) and is nearly debt-free with D/E of 0.21x (in FY17). Vast experience in the EMS space, backward integration and design capabilities and healthy relationship with customers & suppliers clearly provide Dixon competitive advantage (there are no listed competitors engaged in similar line of businesses). Given healthy industry prospects
and continued efforts to expand the product portfolio and customer network, Dixon could continue to register healthy growth in the coming years. At the upper price band of Rs. 1,766 per share, the company is valued at 39.7x on FY17 EPS, which is at a premium, reflecting its strong track record of growth and strengthening balance sheet.”

Capital Market: ” Score 40/100,  The company’s consolidated net sales for year ended March 2017 (FY 2017) increased 77% to Rs 2456.76 crore. The sales of lighting division increased by 28% to Rs 550.80 crore, consumer electronics by 10% to Rs 844.54 crore, home appliances by 44% to Rs 188.03 crore, reverse logistic by 60% to Rs 62.69 crore and mobiles phones more than 999% to Rs 810.71 crore. The OPM decreased by 50 bps to 3.7%. The net profit after share of associates and MI has increased by 18% to Rs 50.38 crore. At the lower price band of Rs 1760 per equity share of Rs 10 face value, the P/E works out to 39.6 times the FY2017 consolidated EPS of Rs 44.5 (on post-IPO equity) and at upper band of Rs 1766, P/E works out to 39.7 times FY2017 consolidated EPS of Rs 44.5 (on post-IPO equity). There is no direct comparable listed company. Rough comparison can be drawn with AC manufacturer Leel Electricals (formerly Lloyd Electric) whose 1/3rd of Rs. 3000-crore FY 2017 top line came from manufacture of OEM and packaged AC (other than own brand Lloyd) and is currently trading at a PE of just 12x, based on FY 2017 EPS of Rs 17.35.”

SMC : “Rating 3/5 Considering the P/E valuation on the upper end of the price band of Rs. 1766, the stock is priced at pre issue P/E of 38.51x on its FY17 EPS of Rs. 45.86. Post issue, the stock is priced at a P/E of 39.70 x on its EPS of Rs. 44.48. Looking at the P/B ratio at Rs. 1766 the stock is priced at P/B ratio of 9.81x on the pre issue book value of Rs.180 and on the post issue book value of Rs. 227.58 the P/B comes out to 7.76x. On the lower end of the price band of Rs.1760 the stock is priced at pre issue P/E of 38.38x on its FY17 EPS of Rs. 45.86.Post issue, the stock is priced at a P/E of 39.57x on its EPS of Rs. 44.48. Looking at the P/B ratio at Rs. 1760, the stock is priced at P/B ratio of 9.78x on the pre issue book value of Rs. 180 and on the post issue book value of Rs. 227.58 , the P/B comes out to 7.73x. “

SP Tulsiyan website: “while topline growth looks promising, coupled with sound balance sheet position, wafer-thin margins, high client concentration, intense competitive nature of business and fully priced issue make the IPO less appealing. Based on fundamentals, better to skip the issue for now and keep it on radar post-listing.”

BP Wealth: “DTIL plans to foray into manufacture of CCTVs and digital video recorders, street lighting (accounting for 1/3 of domestic lighting market, with impetus from Govt’s Smart City Project), exports and greater reach in South India, through the Tirupati unit. DTIL is also to benefit from the growth in consumer electrical industry and also with the increase in purchasing power of the end users. To summarise, while topline growth looks promising, coupled with sound balance sheet position, wafer-thin margins, high client concentration and intense competitive nature of business the company at present has come up with a band price of Rs.1,760-1,766/- with a FY-17 PE multiple of 39.7x. Hence we give a “Subscribe” rating for the same with listing gains.”

Economic  Times: “At the upper price band, the company is demanding a market capitalisation of around Rs 2,000 crore and valuation of 39 times FY17 earnings. Though the company is present in high growth consumer sectors, it operates on low margins with high volatility in earnings growth, reason for the valuation to look unattractive. The company’s business model, with dependence on a handful of clients offers limited margin of safety to investors.”  Complete article

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