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earnings | IST

Dixon Tech expects FY22 revenues to be around Rs 11,000-11,500 cr; margins at 4-4.5% range in H2

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Atul Lall, MD, Dixon Technologies, is of the view that in the second half of the financial year, operating margins would be in the range of 4-4.5 percent since significant growth in revenues is primarily coming from prescriptive business.

Dixon Technologies (India) Ltd, on Friday, reported a 19.63 percent increase in consolidated net profit at Rs 62.64 crore for the quarter ended September, helped by an increase in revenue. The leading electronic manufacturing services (EMS) company had posted a net profit of Rs 52.36 crore in the July-September period a year ago, it said in a BSE filing. The year-on-year (YoY) EBITDA was up 23 percent but the margins were down at 3.9 percent versus 5.5 percent in the year ago period.
Throwing light on the earnings and the outlook, Atul Lall, MD, Dixon Technologies, spoke to CNBC-TV18.
He said, “The margin squeeze has primarily been because of two factors. One is the change in the sales mix, so the revenue growth contribution is primarily because of our prescriptive business, which is the LED television business and the mobile business, which structurally is a low operating margin business. Second is our ODM business, which is washing machines, and lighting; there has been pressure because of increase in the commodity prices and an increase in the freight cost. There is always a lag in passing on this price increase to our principles.”
“In the coming second half, margins are going to be raised. Operating margins would be somewhere in the range of 4-4.5 percent since significant growth in revenues is primarily coming from a prescriptive business. Once we are able to deepen the manufacturing, and shift a part of our prescriptive business to our own design business, then we can see some improvement in the margins but as of now, the margins would be in this range,” Lall said.
On revenues, he said they are confident of doing Rs 11,000-11,500 crore this fiscal. “We are extremely bullish on our revenue targets. The main trigger here is the LED television business and the mobile business under the PLI scheme has ramped up. The order book looks very healthy. I feel within Q4, we are also going to have some revenues coming from the new verticals, like laptops and servers. So, a mix of this is going to help us in achieving a higher revenue target,” he added.
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On the revenue mix, Lall said, “We are an aggressive participant in the PLI scheme and we have already been approved under mobile, wherein we will be achieving our thresholds in the next 15 days. Our IT products PLI is going to get activated and we will be starting production within the month of November.
“We are working on a JV with Bharti Group and have been a beneficiary of the PLI scheme under telecom, which is primarily routers, modems, and we feel that the production for these particular products is going to start somewhere in Q4. We've applied for the PLI for white goods, one for AC components, and also for the backward integration piece in LED lighting, that is mechanicals. So this production is going to come in, in the next fiscal,’ he said.
Lall further mentioned, “We are into the wearable space, wherein we have started a relationship with the largest brand in India. There is an expectation that the PLI scheme in that particular category is also going to be rolled out shortly. So, these are going to be significant contributions in the next one or two years into our revenues and bottomline.”
(With inputs from PTI)
For the full interview, watch the accompanying video