Banking Central | The Curious Case Of Videocon Insolvency

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Emkay Global Financial's report on Dixon Technologies Despite Covid-related disruptions, TV revenues performed well in Q1, with an 11% qoq rise. Revenue and margin for Lighting and Washing machine categories were adversely impacted. EBITDA beat was driven by lower other opex/ employee expense. Gross margin contracted by 273bps qoq, which can be attributable to lower cost absorption and commodity headwinds in ODM-focused business segments, where entire impact of commodity inflation was not passed-on to the customers. With strong order book visibility across business segments, management was confident about revenue recovery from Q2, along with a rebound in margins. To avoid any production delays, it has accumulated inventory for select components. Outlook We cut FY22E revenue/EBITDA by 7%/12% due to the Q1 revenue loss. We believe that after multi-fold stock price returns and a 61% EPS CAGR over FY21-24E, current valuations limit upside. Downgrade to Hold with a TP of Rs4,500 (45x Sep’23E EPS). For all recommendations report, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions. Dixon Technologies 02-08-2021-emkay

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