Dixon Technologies (India) Ltd, the largest homegrown design-focused and solutions company in India, announced a significant partnership with Xiaomi (OTC:XIACF) Technology India Private Ltd on Wednesday. The agreement, made through its subsidiary Padget Electronics, involves manufacturing smartphones and other electronic products for Xiaomi at Padget's facility in Noida, Uttar Pradesh.
This partnership is a significant boost for Dixon, positioning it among the companies vying to become India's answer to Foxconn, Apple (NASDAQ:AAPL)'s key iPhone maker. The deal will allow Xiaomi India to leverage Dixon's eligibility for government incentives under the production-linked incentive (PLI) scheme. For Dixon, this translates into another substantial contract for its mobile manufacturing business.
According to InvestingPro data, Dixon Technologies (India) Ltd, with a market cap of 154.54B USD, has shown promising growth and stability. The company is currently trading at a P/E ratio of 13.57, indicating that it is valued reasonably in the market relative to its earnings. Moreover, the company has shown a revenue growth of 3.09%, indicating a solid financial performance.
Padget Electronics has previously received approximately Rs 110 crore in incentives under the PLI scheme for meeting incremental production targets. The company currently manufactures phones for Reliance Jio, Motorola (NYSE:MSI), and Nokia (NYSE:NOK), with Motorola phones being exported from India.
"We are delighted and encouraged by the trust they have reposed on Dixon for the association and believe that this association will leverage our excellence, superior execution track record and Xiaomi's expertise & leadership in Indian business ecosystem," said Atul B. Lall, Vice Chairman & Managing Director, Dixon Technologies (India) Limited.
InvestingPro Tips suggest that Dixon holds more cash than debt on its balance sheet, and its net income is expected to grow this year. These factors, along with the fact that four analysts have revised their earnings upwards for the upcoming period, make Dixon a promising player in the Technology Hardware, Storage & Peripherals industry. For a deeper dive into Dixon's financial health and future prospects, check out the additional tips available at InvestingPro.
The announcement comes amid a broader push by the Indian government to involve more local players in the manufacturing ecosystem of smartphone players from neighboring Asian countries.
Shares of Dixon Technologies (India) Ltd ended Wednesday up by Rs 188.10, or 3.69 percent, at Rs 5,284.20 on the BSE, reflecting investor optimism about the partnership.
This partnership is seen as a strategic move by Xiaomi as it seeks to regain its foothold in India's smartphone market after facing regulatory scrutiny and customer confusion due to an overextended product portfolio. The Beijing-based company was once an unrivalled leader in India's smartphone market, the world's second-largest, where major phone brands are vying for dominance.
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