NEW DELHI: A day after announcing a joint venture with Chinese mobile maker Vivo on Sunday, the shares of contract manufacturer Dixon Technology jumped 5% to a day's high of Rs 18,321.15.
The Noida-based contract manufacturer, Dixon Technology, along with Vivo, will manufacture mobile phones for Vivo and other companies. Currently, Dixon manufactures phones for Samsung, Xiaomi, Motorola, Oppo, Transsion, Google, and Nothing.
In an exchange filing, Dixon said it signed a binding term sheet, under which Dixon will hold 51% of the share capital, while Vivo India will have a 49% share. However, the companies have not revealed any financial details of the agreement.
This is Dixon's second partnership with a Chinese mobile maker. Earlier this year, the company acquired a majority stake in Ismartu India, the manufacturing unit of Chinese brand Transsion Holdings, by purchasing a 50.10% stake for Rs 238.36 crore in cash.
Vivo already operates a 170-acre manufacturing facility in Greater Noida, with an investment of Rs 3,000 crore. The facility has an annual capacity to produce 120 million smartphones.
Lately, the Indian government has eased visa norms for Chinese techno workers. Additionally, the government has asked Chinese smartphone brands to induct Indian equity partners in their local operations and appoint Indian executives in key roles. Earlier major chinese mobile maker were charged with non-compliance with Indian laws, evading taxes, and foreign exchange violations.
"We are excited to work together to create a stronger, more diversified, and future-proof organization," said Atul B. Lall, Vice Chairman of Dixon, in a statement. He further added that the proposed joint venture will undertake part of Vivo's OEM orders of smartphones in India and can also engage in OEM business of various electronic products of other brands.
Meanwhile, financially, Dixon Technology's consolidated revenues for the quarter ended September 30, 2024, were Rs 11,528 crores, compared to Rs 4,944 crores in the same period last year, representing a growth of 133%.
The company's revenue from mobile phones and EMS divisions for the quarter was Rs 9,444 crores, representing a growth of 235% year-on-year. Operating profit was Rs 308 crores, representing a growth of 231% year-on-year.
As per the company's investor call in the second quarter, four operational facilities and one facility with 1 million square feet under construction, the company has taken an additional 1.5 lakh square feet facility in Noida on lease to cater to the increased demand of its principal customer.
The company said that after acquiring Ismartu on August 13, 2024, it has a healthy order book for the Transsion group of brands, including Tecno, Infinix, and Itel, and another brand, Nothing. It also said that for Motorola, it has been consistently clocking a volume of 1 million per month, and the order book looks healthy in the coming months.
The volumes for Xiaomi and Oppo in Q2 witnessed significant growth quarter-on-quarter. Dixon is also expected to start manufacturing displays by the end of Q1 or the beginning of Q2 next financial year.
In IT hardware products, the company has finalized business with HP and Asus, and the definitive agreements are in the final discussion. Along with Acer and Lenovo, it now has four global brands on board out of the top five brands in India.
The manufacturing of Acer has already started in production, and production for Lenovo is expected to start in this quarter from its Noida facility.