- Sales increased by 40% y-o-y to Rs 2,953 Cr. Operating profit jumped 48% y-o-y to Rs 118 Cr led by strong sales (led by price increases and strong volumes) and y-o-y decline in employee cost and other expenses. OPM improved by 22 bps to 4% in Q4FY22. PAT increased by ~42% y-o-y to ~Rs 63 crore.
- Segment wise – Mobile phones (44% to total revenue) revenue grew more than three-fold due to addition of customers at Rs 1,294 crore and operating margin improved by 100 bps to 3.5%. Consumer electronics (34% of total revenue) declined by 14% y-o-y to Rs 1,010, however operating margin has improved by 40 bps to 2.8%. Lighting products declined by 20% y-o-y due to demand slowdown to Rs 304 Cr and operating margin declined by 90 bps y-o-y to 7.1% as entire cost inflation could not be passed on to customers.
- Consumer Electronics: Annual capacity set to increase from 6 million sets to 15 million sets catering to 35% of India’s market. The company is setting up a 4,50,000 sq feet complete assembly and injection moulding line. The company has added one of the largest global brands as its customer and therefore expects significant volumes. It expects LED volume to grow by 40% and expects margin to be at similar levels of FY22.
- Monitors: The company has two of the largest brands as its customers for LED monitors and expects volume to be 0.5 million. It has a strong order book and expects the same margin profile as LED TVs.
- Lighting: The company would pass on the increase in input cost to customers and therefore expects margin to improve after a quarter or two. Dixon is the largest ODM in lighting and expanding its capacity from 5 million to 9 million. The company through its subsidiary- Dixon technology solutions ltd. is investing in LED lighting solutions and would invest Rs 100 crore over five years.
- Home appliances: The company has 160 models in semi-automatic washing machines in 6-14 kg category. The company is expanding capacity to 4 million units p.a. It has also added more customers in this category and expects volumes of ~1.6 million in FY23. In the fully automatic space, its capacity is 0.6 million and Bosch is the key customer, while it has added Lloyd and Thomson recently.
- Mobile: Mobile is the fastest growing vertical with monthly volume of 4 lakhs and strong order book. It has key customers like Motorola, Nokia and Samsung. In IT hardware, the company is making hardware for acer and has tied up for manufacturing of tablets with a large brand.
- Future Outlook: The company is looking at 55-60% revenue growth in FY23 which will be significantly led by mobile division. Further, the company has strong order book in all its verticals which would aid revenue growth. As far as price hikes are concerned, in ODM verticals, in case of washing machines, the company has raised prices by 1.75- 2.0%. In lighting the company has taken hikes of 1.5-2.0% but more hikes are required given the cost inflation. Operating margin is expected to be between 4.0-4.25% in FY23. The company plans a capex of Rs 340 cr in FY23 which would include PLI related capex, maintenance capex and a part of the construction cost for the refrigerator plant.
Disclaimer: The information here is provided for reference purposes only and should not be misconstrued as investment advice. Under no circumstances does this information represent a recommendation to buy or sell stocks or MF.
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Originally Published On:https://blog.investyadnya.in/strong-topline-growth-in-electrical-wires-but-bottom-line-affected-due-to-commodity-inflation-dixon-technologies-q4-fy22-conference-call-highlights/