The Outperformer Stock Riding On ‘Make in India’

There is always that player who can outperform the others in the market and sometimes outperform the Sensex. With the plan to shift production to India and reduce import dependency along with a global sentiment to decline manufacturing in China, the shares of Dixon Technologies is riding high. The stock was listed back in the year 2017 and has risen by 125% within the last one year and has also smartly outperformed the Sensex that dropped 17% during the same period. The stock was trading at INR 5,270 on Wednesday, which is just 5% from the 52 week high.

The company, Dixon Technologies manufactures mobile phones, consumer electronics, lighting products, and home appliances. Siddharth Sedani, Vice President for Equity Advisory at Anand Rathi Shares and Stock Brokers said that this was due to the shift of manufacturing from China to Make in India making it the key driver for the stock. Dixon Technologies is the biggest manufacturer of LED panels in India and also manufacturers private label brands. The stock is expected to keep performing well because of the shift in manufacturing plans to India from China.

But it is not just India, but also countries like Vietnam are also likely to gain a share of the manufacturing bases. Since labour cost is the biggest contributor to fixed costs, Electronic Manufacturing Services (EMS) companies have the advantage to build and scale based on the competitiveness of the labour.

There will be a slow growth over FY21 due to the global pandemic, it is believed that since the overall structural demand is likely to remain unchanged, the market will bounce back to 30% levels over the FY21-25 period. To take advantage of the PLI (Product Linked Incentive) scheme, Dixon Technologies is also planning to invest Rs.250 Crores. This will lead to the employment of 2,500 people over a period of 8-9 months.