Dixon Technolog.

Dixon Technologies reported robust Q2 FY26 results with consolidated adjusted revenues growing 29% YoY to INR 14,858 crores and adjusted EBITDA increasing 34% YoY to INR 564 crores. Adjusted PAT also grew 27% to INR 323 crores. However, the quarter's top-line was impacted by a temporary distortion caused by the mid-August announcement of GST rate reductions, leading to a significant postponement of purchases across trade and consumer channels, particularly affecting TVs, refrigerators, and washing machines. Demand normalized after September 22, but the short window was insufficient for full recovery.

The Mobile and EMS segment was a key growth driver, with revenue reaching INR 13,361 crores, a 41% YoY increase, and operating profit surging 53% to INR 472 crores. Dixon remains the largest domestic manufacturer of mobile phones. The company is in discussions with a new large ODM for smartphones, expecting to start manufacturing by Q4 FY26 or early Q1 FY27, contributing approximately 0.5 million units per month. The Longcheer JV, which received PN3 approval, is expected to be operational by April 2026 and contribute 8-10 million units to FY27 volumes.

Dixon is aggressively pursuing backward integration to enhance margins and capabilities. A 74:26 JV with HKC for display modules is creating capacity for 24 million smartphone and 2 million notebook displays annually, with plans to expand to 60 million smartphone displays and foray into LED TV and automotive displays. The company acquired a 51% stake in Q Tech India, a manufacturer of camera and fingerprint modules, consolidating financials from September 26, 2025. Q Tech aims to increase smartphone camera module volumes from 40 million to 190-200 million units per annum, targeting INR 6,000-7,000 crores revenue and sub-10% EBITDA margins in the next 2-3 years.

The IT Hardware segment demonstrated exceptional growth, with revenue soaring 481% YoY to INR 331 crores. Dixon targets INR 1,200-1,300 crores revenue for FY26 and INR 4,000-5,000 crores in the next two years for this segment. A 60:40 JV with Inventec Corporation of Taiwan for notebook PCs, servers, and components is finalized and expected to be operational by Q1 FY27. In telecom, Dixon secured a significant order from a large U.S. Telecom customer for complex microwave radios, with pilot production by December and commercial production by March 2026, aiming for $1 billion in revenue in a couple of years, with exports starting by Q2/Q3 FY27.

Home Appliances revenue was INR 429 crores with an operating profit of INR 50 crores (11.7% margin). Construction for capacity expansion in Tirupati is ready by Q3 FY26, with new semi-automatic washing machines (16kg, 18kg) and robo vacuum cleaners (for Eureka Forbes) launching by December 2025. The refrigerator business, with INR 145 crores revenue, faced subdued growth due to new energy efficiency norms. Dixon plans to expand capacity from 1.2 to 2.5 million units and introduce new products like mini bars, deep freezers, and two-door side-by-side refrigerators.

The company maintains a strong balance sheet with a net debt position of INR 203 crores and a negative 6-day working capital cycle. CAPEX for H1 FY26 was INR 550 crores, with a similar run rate expected for H2, totaling around INR 1,100 crores for FY26. A long-term investment commitment of INR 3,000 crores over the next three years is planned for components manufacturing. Dixon booked INR 150 crores in PLI income for Q2 FY26, bringing the H1 FY26 total to INR 290 crores. Mobile PLI claims for Oct '24-Jun '25 are under appraisal, and Telecom PLI for FY25 has been received.

Dixon aims for INR 1 lakh crore in sales over the next three to four years, driven by continued mobile growth, strategic backward integration into components, and expansion into IT hardware, telecom network equipment, and lighting. The company emphasizes leveraging its partnerships for global market access, particularly for mobile exports and telecom products. Management expressed confidence in achieving aggressive growth while maintaining financial discipline, with internal cash flows expected to support planned expansions.