Dixon Tech shares plummet up to 9.5% even as HSBC maintains ‘buy’

Shares of the consumer durable firm Dixon Technologies traded in the red amid broader market losses in the market. At around 10:41 am, shares of the company were down over 1 per cent at Rs 7757 per share. 

The losses in the stock are seen even as global brokerage HSBC maintained its buy on the stock with a raised target of Rs 8400 from the earlier Rs 6550.

The brokerage maintains that the company is set to acquire a majority stake in  Transsion Holdings’ India mobile assembly unit, a major EPS-accretive development. Also, it expects the company to more than double its revenue over  the next two years; with profit growth expected to be higher than the revenue growth.

Dixon Technologies last week announced that it has entered into a Share Purchase Agreement with Ismartu In Pte. Limited, Transsion Technology Limited, 5A advisors LLP and Ismartu India Private Limited, for proposed acquisition of majority stake constituting 50.10% and further acquisitions in tranches in Ismartu and a Shareholders’ Agreement with Ismartu Singapore, 5A Advisors LLP, and Ismartu for operation and management of Ismartu.

Ismartu is engaged in electronics & mobile devices manufacturing with three numbers of state of the art manufacturing facilities in Noida under the brand name of ‘Itel’, ‘Infinix’ & ‘Tecno’ and is one of the market leaders in Smartphones & feature phones categories respectively in India. 

Commenting on this acquisition, Atul B. Lall, Vice Chairman & Managing Director, Dixon Technologies (India) Limited said, “This acquisition is a momentous milestone for us, solidifying our positioning forsustained success and continued leadership in the mobile phones manufacturing industry in India. The “ISMARTU” team brings a wealth of experience and knowledge to the table, and we are excited to work together to create a stronger, more diversified, and future-proof organization. The combined expertise, resources, engineering prowess and other manufacturing capabilities of both the companies will further capitalize on growth opportunities in the burgeoning Indian EMS industry and we are excited to contribute to the nation's growth story." 

Shares of the company at day’s low hit levels of Rs , a cut of over 9 per cent, only to recover later.