Dixon Technology IPO to open for subscription on Sep 6, 2017 - Sushil Finance

Dixon Technology was incorporated in the year 1993 engaged in manufacturing products in the consumer durables, lighting and mobile phones markets in India. Its diversified product portfolio includes (i) consumer electronics like LED TVs; (ii) home appliances like washing machines; (iii) lighting products like LED bulbs and tube lights, down lighters and CFL bulbs; and (iv) mobile phones. It also provides solutions in reverse logistics i.e. repair and refurbishment services of set top boxes, mobile phones and LED TV panels. Key customers include Panasonic India Private Limited, Philips Lighting India Limited, Haier Appliance (I) Pvt. Ltd., Gionee, Surya Roshni Limited, Reliance Retail Limited, Intex Technologies (I) Ltd., Mitashi Edutainment Pvt. Ltd., Dish Infra Services Private Limited.

The Company has six manufacturing facilities located in the states of Uttar Pradesh and Uttarakhand. It is fully integrated end-to-end product and solution suite to original equipment manufacturers ("OEMs") ranging from global sourcing, manufacturing, quality testing and packaging to logistics. They are also a leading Original Design Manufacturer ("ODM") of lighting products, LED TVs and semi-automatic washing machines in India.

The company is coming out with an IPO of 3,393,426 equity shares comprising fresh issue of 339,751 equity shares and offer for sale of 3,053,675 equity shares at a price band of Rs. 1760 to Rs. 1766 per share. The Issue Opens for subscription on September 6, 2017 and closes on September 8, 2017.

HIGHLIGHTS

* Strong relationships with a diverse top-tier customer base.
* Flexible and cost-effective manufacturing capabilities.
* Leading market position in key verticals.
* End to end solutions provider with dedicated research and development capabilities.

Objects of the issue

1. Repayment/pre-payment, in full or in part, of certain borrowings availed by our Company. (Rs. 22 Cr.)
2. Setting up a unit for manufacturing of LED TVs at the Tirupati Facility. (Rs. 7.58 Cr.)
3. Enhancement of our backward integration capabilities in the lighting products vertical at our Dehradun I Facility. (Rs. 8.86 Cr.)
4. Up-gradation of the information technology infrastructure. (Rs. 5.32 Cr.)
5. General corporate purposes.

OUTLOOK:

The company is fully integrated end to end product & solution and backward integration in manufacturing process which helps to improve cost efficiency, reduces dependency on third party suppliers and saves time. In-house R & D centre helps address consumer requirements across geographies, introduce new and unique products in the market and enhance existing products with emerging technologies.

With strong customer relationship company has successfully expanded and diversified customer mix.

Reviewing Financials of the company, Revenue has grown by CAGR 34 % in last 5 years and Net Profit grew at CAGR 78 %. At a price of Rs. 1766, the company is valued at a P/E of 39x. The definite earning visibility and Long runway of growth opportunities is likely to give this company a premium on listing. Further, the company has very lucrative return ratios with average of last 3 years of 30% ROE and 25% ROCE. Further the low debt gearing speaks of the efficiency of the company, Sushil Finance believes this is a unique combination of "Make in India" and "Digital India" boom and hence it is worth investing.

Source : Equity Bulls

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