Dixon Technologies shares have experienced significant selling pressure, declining 35% over the last three months and touching their lowest level since June 2024 as of Tuesday's close. The stock's poor performance has been attributed to challenges faced by one of its key clients.

Client Concentration Risk Materializes

Brokerage firm Phillip Capital highlighted the primary reason behind Dixon's recent underperformance in a Tuesday note, pointing to a sharp decline in volumes from Motorola, a critical client for the company.

The heavy dependence on Motorola has become a significant concern, with the client accounting for over 45% of Dixon Technologies' total revenue in financial year 2025. This concentration risk has materialized as Motorola's business faces headwinds.

Motorola's Operational Challenges

Motorola's volumes declined 20% year-on-year during the third quarter, primarily due to intense competition from Apple, which resulted in muted sales performance. The situation was further complicated by Motorola's strategic decision to increase outsourcing to Karbonn, which received 23% of Motorola's volumes during the quarter.

According to Phillip Capital, this dual impact meant that Dixon not only lost volumes due to Motorola's overall decline but also faced reduced allocation as the client diversified its manufacturing partnerships. The brokerage noted that this development aligns with their thesis that mobile phone assembly offers little competitive moat.

Analyst Outlook and Price Targets

Phillip Capital maintains one of the most bearish stances on Dixon Technologies, setting a price target of ₹9,085, which represents a 19% downside potential from current levels. This target is notably the lowest on the street and the only one below the ₹10,000 per share mark.

Ambit Capital also revised its outlook on Wednesday, cutting its price target to ₹11,275 from ₹11,868 while maintaining a "sell" rating on the stock.

Market Consensus and Trading Activity

Despite the recent negative sentiment from some brokerages, the broader analyst community remains largely optimistic about Dixon Technologies. Among 34 analysts covering the stock, 26 maintain "buy" ratings, two suggest "hold," and six have "sell" ratings.

The consensus price target estimates suggest a potential upside of 49.10% for Dixon's shares, indicating a significant divergence in analyst opinions about the company's prospects.

Shares of Dixon Technologies were trading 1.20% higher at ₹11,375 during Wednesday's session, showing some recovery from Tuesday's close when the stock hit its lowest level since June 2024.

Dixon Technologies shares extended their decline for the third consecutive session on Tuesday, January 13, falling over 5% and hitting an 18-month low. The stock's persistent weakness has pushed the company's market capitalisation below the ₹70,000 crore threshold, marking a significant milestone in the ongoing correction.

Stock Performance Analysis

The electronics manufacturing services company's shares have experienced substantial pressure in recent trading sessions. Key performance metrics highlight the extent of the decline:

The stock has declined in six out of nine trading sessions in 2025 so far, making it the top loser on the Nifty 500 index during Tuesday's session.

Brokerage Outlook and Concerns

HSBC maintained its "buy" rating on Monday but significantly reduced its price target to ₹15,500.00 from the previous ₹19,600.00. The brokerage identified several headwinds affecting the company's near-term prospects:

• Surge in memory prices impacting cost structure
• Delayed joint venture approvals affecting expansion plans
• Mobile PLI expiry concerns creating uncertainty
• Expected subdued third quarter performance due to absence of major events

As a result of these factors, HSBC has cut Dixon's earnings estimates for financial years 2026-2028 by 3% to 5% and reduced its target price-to-earnings multiple to 50 times.

Analyst Sentiment

Despite the recent price action, analyst sentiment remains largely positive. Among 35 analysts covering Dixon Technologies:

Investec maintained its bullish stance with a price target of ₹18,900.00 in its Tuesday note, demonstrating continued confidence in the company's long-term prospects despite near-term challenges.

Market Impact

The sustained decline reflects broader concerns about the electronics manufacturing sector and company-specific challenges. The breach of the ₹70,000 crore market capitalisation mark represents a psychological threshold for investors, while the 40% decline from recent highs indicates significant wealth erosion for shareholders. The stock's position as the top loser on the Nifty 500 index underscores the severity of the current correction in Dixon Technologies shares.