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Dixon Technologies Q4FY21 Conference Call Highlights

Dixon Technologies Q4FY21 Conference Call Highlights

Published on 03 June 2021|
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Q4FY21 Highlights:

  • Consolidated revenue for the quarter ended 31st March 2021 was Rs. 2,111 Cr. against Rs. 857 Cr. in the corresponding quarter last year amounting to growth of 146%.
  • The Consolidated EBITDA of the company was Rs. 80.8 Cr. in Q4FY21 against Rs. 55.9 Cr. in Q4FY20 amounting to growth of 45% YoY.
  • While, the Consolidated PAT for the Q4FY21 was 44.3 Cr. against 27.6 Cr. in the quarter ended 31st March 2020, up by 60% YoY.

Downfall in EBITDA Margins:

  • Gross Margins & EBITDA Margins contraction on YoY was primarily driven due to substantial change in segments mixed with a higher increase in the share of business during the quarter from LED TVs- an OEM business with a lower margin. Also, Steep input and price increases on the commodity side, which impacted the OEM business.
  • EBITDA was also factored in because of ESOP Expenses of around Rs. 8 Cr. in Q4FY21 on account of newbies of plan 2020.
  • In the ODM business- primarily lighting & washing machines, the company lagged in passing on the increase of commodity prices to the consumer. Hence, had a negative impact.
  • Through Calibrated Price Increases, Inventory Planning, and Value Engineering, the company will manage the margins in the ODM business.

Cash Flow & Debt:

  • The company is having a cash balance of Rs. 164 Cr. with a net debt rate as of 31st March 2021.
  • Delivered a Strong Return Ratios with ROE of 25% and ROCE of 31.4%.

Consumer Electronics:

  • Revenues from the Consumer Electronics segment of the business is Rs. 1,179 Cr. for the quarter ended 31st March 2021 which is increased by a significant 200% from Rs. 393 Cr. in Q4FY20.
  • Operating Profit of this segment also reported good growth of 189% YoY from 9.8% in Q4FY20 to 28.2% in Q4FY21.
  • Currently having a capacity of 4.4 million tv sets including backward integration in both lcm and smt which is the largest capacity in India.
  • The Company has also started production of Large Screen TVs (70 inches and above).
  • Expanding the capacity to 5.5 million in the coming 2-3 months.
  • Getting a new product sku that is LED Monitors- for this tied up with 2 largest global brands for manufacturing LED Monitors.

Lighting:

  • This business of the company has also recorded strong growth in revenue of 50% YoY from Rs. 255 Cr. in the quarter ended 31st March 2020 to Rs. 382 Cr. in the quarter ended 31st March 2021.
  • Here, Operating Profit increased growth of 21% YoY to Rs. 31 Cr. in Q4FY21 against Rs. 25 Cr. in the same period last year.
  • Margins in this business have been impacted due to a rise in input cost.
  • Dixon’s capacity is at 300 million bulbs which are 40% of India’s capacity.
  • The Company is in discussion with large international retail chains for export arrangements which can commence by mid-Q2FY22.
  • Also, Dixon is eyeing entering Outdoor Lighting and which will be offered by the company by Q2FY22.
  • For this segment, the company is going through a PLI scheme and for the same, the application can be filed by late Q2 or Q3 of FY21. It mainly focuses on the creation of component systems that will be helpful for the expansion of margins of the company.

Home Appliances:

  • Revenue of the company has grown from 90 Cr. in Q4FY20 to Rs. 147 Cr. in Q4FY21 amounting to the huge growth of 63% YoY.
  • In this business segment, there has been pressure on Operating Profit margins due to inflation in commodity.
  • Having Largest Product Portfolio in Semiotic Medic Category under this segment. Here, the company is expanding the capacity from 1.2 million to 1.5 million which will happen by August- September 2021.
  • Fully Automated Top Loading Capacity at Tirupati will come up by December 2021. The company will start this in Q3FY21. The company has already closed a deal with Bosch- an anchor customer.
  • For the Refrigerator, the Company will create 0.6 million to 1 million capacity by Q3FY23. Industry demand stands at 10 million units.
  • The company will be applying in PLI Scheme for ACs specifically for PCB Assemble.

Mobile Phone & EMS Division:

  • Revenue of this business division has grown by a massive 381% from Rs. 60 Cr. in Q4FY20 to Rs. 290 Cr. in Q4FY21.
  • Targeting to take the capacity to 15 million per annum in a couple of years against the present capacity of 3.5-4 million. Here, 60%-65% will be exported.
  • The next opportunity with the company is pursuing Laptops, Tablets, and IT Hardware and so has applied under the PLI Scheme and the company is a strong contender for the same. Approval may come by next month.
  • Already signed MoU with Global Brands for manufacturing Laptops.
  • In the Telecom Products section, JV has been formed between Dixon and Bharti in the ratio of 74:26.

Capex:

  • Total Capex done in FY21 was around Rs. 167 Cr.
  • Due to expansion plans and more PLIs incoming, the Capex will be around Rs. 200 Cr. in FY22.
  • Telecom Capex would be Rs. 50 Cr. and Refrigerator CAPEX would be Rs. 100 Cr. incoming 1-1.5 years.
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