Ladies and gentlemen, good day and welcome to Dixon Technologies Q4 and FY2025 Earnings Conference Call, hosted by DAM Capital Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital. Thank you, and over to you, ma'am.
Yeah. Good evening, everyone, and a warm welcome to the Q4 FY25 Earnings Call of Dixon Technologies India Limited. We have the management today being represented by Mr. Atul Lall, Managing Director and Vice Chairman, and Mr. Saurabh Gupta, Chief Financial Officer. At this point, I'll hand over the floor to Mr. Lall for his initial remarks, post which we'll open up the floor for Q&A. Thank you, and over to you, sir.
Thank you, Bhoomika. Good afternoon, ladies and gentlemen. This is Atul Lall, and we have on the call today our CFO, Saurabh Gupta.
Good evening, everybody.
Thank you very much for joining the earning call for the quarter ended March 2025. Despite a dynamic and challenging macroeconomic environment, the company has delivered another quarter of robust performance. Our diversified revenue streams have insulated us from segmental volatility. The key highlights for the quarter are as below. Consolidated revenues for the quarter ended March 31st, 2025, was INR 10,304 crore against INR 4,675 crore in the same period last year, which is a growth of 120%. Consolidated EBITDA for the quarter was INR 454 crore against INR 199 crore in the same period last year, which is a growth of 128%. Consolidated PAT for the quarter was INR 401 crore against INR 95 crore in the same period last year, which is a growth of 322%. This includes fair value gain of INR 250 crore in the value of Dixon's stake of 6.5% in Naviste Inputtech Limited.
Excluding this gain, the adjusted PAT for the quarter was INR 185 crore, which is a growth of 95%. Besides leveraging industry trade wins, we are scaling up across all segments by taking higher share of customers' wallets, new customer additions, and driving margin expansion through operational efficiencies, value engineering, and manufacturing excellence. The company's strategy to deepen the level of manufacturing by getting into components will further lead to margin expansion. With our unwavering commitment to financial prudence, we continue to demonstrate exceptional discipline in managing our working capital cycle, which is true at negative five days, a healthy balance sheet with cash and cash equivalent balance of INR 264 crore, and no gross debt to equity ratio of 1.07 as of March 31st, 2025. This near-zero debt position, along with adequate credit lines, gives us significant financial resilience to fund our current and future growth requirements.
Improvement of ROC to 48.5% and ROE of 32.5% as of 31st March 2025, which is well ahead of the industry's benchmark, was driven by higher-tech turnover, operating leverage, and optimized capital allocation, underlining the quality of our earnings, consistent focus on value-attractive growth, and a structured efficiency of our business model. ROC and ROE will always remain key guiding parameters in strategic investment decisions. We continue to invest in our capacities, backward integration, and diversify into new product categories to support long-term growth opportunities with huge focus on quality, manufacturing excellence, and consistently meeting the needs of our principal customers, and strengthen our position as a key player in the industry.
We see ECMS, that's Electronic Component Manufacturing Scheme, launched on the 8th of April by the Government of India as a strong enabler for backward integration, cost efficiency, and long-term value creation, and are committed to leveraging the scheme to enhance capabilities and contribute to India's goal of becoming a global hub for electronic manufacturing. We have already rolled out a project for display modules. We are evaluating various other component categories like camera modules, mechanical enclosures, and lithium-ion batteries, and will be actively participating under the ECMS. Now, I will share with you the business performance and insights in each of the segments. Mobile phones revenue for the quarter for mobile business was INR 9,102 crore, a growth of 194% year-on-year, and operating profit of INR 349 crore, which is a growth of 232% with an operating margin of 3.8%.
Out of this revenue for telecom, hearables, and wearables, were INR 188 crore and INR 196 crore, respectively. Our collaborations with leading global smartphone brands have grown deeper, reinforcing our standing as a reliable and respected partner in mobile manufacturing. We are expanding capacities by 50% from our current levels for our anchor customers to meet their increased order book, a large part of it due to an account that is exposed to North America in light of the evolving geopolitical scenarios. We expect a strong growth in the volume for Longcheer and order books for Xiaomi looks decent. For Compal, the volume we are expected to increase for large U.S. brands with potential opportunities for exports. iSmartu is having a strong order book from the brands like ITEL, Infinix, and TECNO, and also Nothing.
With export order book to African markets, we are tranching growth and leaders with almost 80% market share, and also increasing focus will be on deepening the level of manufacturing by getting into components in the JV with them. We have started manufacturing for a new partner, NXP Cell, to manufacture a smartphone for French brand Alcatel and have a decent order book. We are in the process of filing our PN3 application for FDA approvals for our JV with Vivo and simultaneously working on closing the definitive agreements.
Construction is underway for the display module facilities in partnership with HKC, focusing on mobile phones and IT hardware products in the first phase, with mass production expected to commence by the end of this fiscal year, with a capacity of 2 million displays per month, which will be further enhanced to 4 million displays, and also we will have the capacity of 2 million laptop displays in this phase. We are constructing a new factory of almost 1 million sq ft in Noida for our mobile manufacturing. With the announcement of component PLI, we are now in active discussions with our prospective technology partners for camera modules, lithium-ion batteries, and enclosures. Consumer electronics, which comprises LED TVs and refrigerators. Revenue for the quarter was INR 689 crore, with an operating profit and margin of INR 42 crore and 6.1%, respectively.
Out of this, the revenue for refrigerator business was INR 197 crore. Segment margins expanded 270 basis points, primarily driven by strong profitability in our refrigerator operations on account of ramp-up and stabilization of operations leading to normalized margins. LED TVs. The global TV industry is witnessing subdued demand, primarily due to structural challenges and a significant shift in consumer preference. We are increasingly offering customized solutions to our customers and are now working closely with Amazon Fire TV Solutions and LG for webOS, which is expected to be rolled out by Q1 of current fiscal. In addition to interactive flat panel display TVs, we are now starting manufacturing digital signage solutions from 65 in- 100 in and have a decent order book. Further, we plan to invest in CKD and set up a robotic panel assembly line for these product categories.
We are also in discussions for partnerships for manufacturing for industrial institutions and automotive displays and exploring opportunities in both B2B and institutional trade. Refrigerators. Within the first year of operation, we have been able to capture around 8% of the Indian market and 48% of OEM addressable market in the direct cool category. We have onboarded more than 15 customers in a year in the direct cool category, owing to the push shown by our brands for our inclusion and quality. We are also expanding our capacity in direct cool categories to 2 million per annum from 1.2 million per annum, along with foraying into the new products in the cooling division like two-door frost-free, side-by-side, mini bars, deep freezers, and mini coolers. Order book for 2025-2026 looks very healthy, and we expect a growth of 50% in the current fiscal. Home appliances.
Revenue for the quarter was INR 202 crore. Operating profit was INR 37 crore. Our growth of 23% year-on-year is an operating margin of 12.2%. Margin expansion was mainly supported by scale-driven efficiencies, value engineering, cost optimization, focus on innovation, and value-added offerings to our customers. We are further expanding our manufacturing capacity in our Gupta plant in order to meet the increased order books of our clients. In the coming fiscal, we will also be launching semi-automatic washing machines in 16 kg and 18 kg capacity category, which will be the first across the industry. We have already started working on the front-load washing machines, robotic vacuum cleaners, and initiated many new designs to our OEM solutions in both the categories, which are expected to be launched by Q2 of 2025-2026. Lighting. Revenue for the quarter was INR 200 crore with an operating profit of INR 15 crore with a margin of 7.3%.
Our 50/50 JV, the Signify, is expected to commence operations from Q2 of the current fiscal following the signing of definitive agreements, which are anticipated to close by the end of May 2025. The JV is expected to generate operating leverage, with Signify expanding into new categories, including high-end door lighting products and professional lighting, along with unlocking export opportunities. During the quarter, we operationalized our backward integration facilities for enclosures used in patents, which is expected to enhance cost efficiency and contribute to margin improvement. Telecom and networking products revenue in this segment for the quarter was INR 1,288 crore, which is almost 5x growth year-on-year, along with superior operating margins and robust balance sheet. Our new Noida facility in Q3 of this fiscal is now operating at an optimal level to meet the increased order book for our anchor customers.
Leveraging the rapidly increasing home broadband penetration in India, we have doubled the capacity of 5G fixed wireless access devices to cater to the demand of our anchor customers. Our first model of IPTV boxes has ramped up, another model to stick in Q2 of this current fiscal for our anchor customers. In line with our strategy of backward integration, we have localized certain components like plastic molding, adapters, and are working on localizing more components like mechanicals, connectors, etc. With a solid order book for our anchor customers, export prospects to a large OEM, this vertical is set to play a pivotal role in Dixon's growth. We are now deeply exploring to manufacture non-customer-premised equipment and low-volume IMS products like radio access networks, Ethernet switches, network transport equipment.
Laptops and tablets, that is, IT hardware products, our dedicated IT hardware product manufacturing unit in Chennai has completed the pilot run, and mass production has already commenced and will significantly ramp up in coming months for both HP and Asus. Production for Lenovo has ramped up to almost 30,000 units per month with healthy order book for the coming period. We are entering into 60/40 JV with an Inventec corporation. It's one of the world's top five IT products OEM for manufacturing of notebooks, PC products, servers, desktop PCs, including its components like SSDs, memory, power supply in India, and in process of finalizing the manufacturing facility in Chennai adjacent to our current facility. We are also exploring opportunities for localizing mechanical enclosures for IT hardware under ECMS. Wearables and hearables.
Revenue for the segment was INR 196 crore for the quarter with healthy operating margins and extremely good ROC. We have a strong order book in this business. We are in discussion to expand product portfolio with additional new brands with focus also on backward integration and localization. Rexon Electronics is JV with Rexon achieved revenues of INR 121 crores in the quarter, with healthy margins, superior ROC. We have finalized a new manufacturing location in Chennai, Tamil Nadu for meeting the increased order book for our anchor customer. I would like to stop here, and I and Saurabh are there for you to address any questions that you may ask. Thank you.
Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone.
If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have our first question from the line of Aditya Bhartia from Investec. Please go ahead.
Hi, good evening, sir. Hi, Aditya. My first question is on the mobile phone side. I just wanted to understand how we're thinking about the ramp-up in volumes from here on. This particular quarter was more like a flattish quarter. From here, on a sequential basis, of course, from here on, how should one think about volumes ramping up? My second question is on the consumer electronics business, wherein the TV revenues appear to have fallen quite sharply, and it's been fourth of this consecutive quarter that that's happening.
Just wanted to understand how much of this is the overall market phenomena and how much of this could be on account of maybe some market shakeout.
I would say responding to the first part of your question, the smartphone order book from the current quarter is looking very healthy. From our anchor customer, the order book is very, very good because we have really ramped up our exports to North America. The order book from both Xiaomi and also Longcheer has increased significantly from the current quarter. Also, the numbers of iSmartu wherein we do for ITEL, TECNO, Infinix, and also Nothing looks very good. The order book is very, very healthy. From the current quarter, the combined volume would be somewhere in the range of around 3.3 million-3.5 million per month. Yeah.
Is this volume that you mentioned, sir, 3.3 million-3.5 million per month, the volume that we did in the fourth quarter for smartphones?
No, no, no. This is the current quarter. Monthly order book.
Okay. Understood. Understood. Okay. Understood.
Yeah. Responding to your second part of the question, yeah, TV is under pressure. There is an overall decline. There is a structural issue with the category assets. Also, we have lost a bit of the market share. That business is under pressure. That I humbly accept.
Do we have the flexibility of maybe lowering the margins a bit and trying to regain market share, or is it a scenario that customers want to be a little more broad-based in terms of their vendors and therefore are deliberately looking for an alternative?
We are working on various fronts, Aditya.
One is expanding the product portfolio. We have already started the IFPD. We are looking at digital signages and also educational TV. We have gone in for more backward integration. We have optimized our cost structures. We are migrating more and more to OEM where the margin profile is better. We are launching new operating systems. We are on Amazon Fire TV, which will be launched shortly, and also LG. It's slightly premature. We are also looking at some large strategic relationships in this business. Please give us some time. I'm fairly confident that it's going to materialize. Various actions are being taken to bring this business back on track.
Perfect, sir. That's great to hear. Thank you so much.
Thank you.
Thank you.
Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. I repeat, ladies and gentlemen, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Ankur from HDFC Life. Please go ahead.
Yeah. Hi, it's Ankur. I'm good. Thank you as always for your time. So my first question again on the cellphone side and more so on upcoming competition in the cellphone business, in the context of our PLI, as you know, everybody kind of going away in FY2026.
If you could just help us understand how you're seeing competition coming up here, how do we retain and more so continue growing the way we have on the cellphone side.
Ankur, you see, we have a large share of the outsourcing opportunity for mobile business. Just looking at the numbers, the total market of 150-odd million. Out of that 150-odd million, the Android space is around 135 million-140 million. Various brands are manufacturing in-house, and outsourcing opportunity is around 90 million. Including our new JV with Vivo, we are targeting for around 60 million-65 million by next year. That's the number we are talking about. The questions that you have raised are very pertinent. The first point is how do we respond to the competition? The second, the PLI is getting over in 2025-2026. This is the last year.
On the first part, we appreciate we have deep strategic relationships. Our largest customer, Motorola, which has really done well, and now we have a large export opportunity with them. This relationship is very deeply entrenched. For anybody to be very candid, to catch up is not an easy task at all. The second is our large relationship with Transsion, and that's our JV. The third, so that means all the brands like Infinix, ITEL, Vivo, ITEL, and TECNO are with us, and Nothing is with us. Similarly, our forthcoming JV with Vivo is a strategic relationship wherein, as per the binding term sheet, a very large percentage has to happen in JV only. Balance, of course, the market is open, but we have to deliver. The competition will be on deliverables. We strongly feel that we have the first-mover advantage in this business.
We also have a large scale with an operating leverage. Also, we have the first-mover advantage of backwardly integrating into components wherein we will generate fairly good blended margin to control this market. Also, the backward integration play plus the operating leverage generated through the large scale and also significant investment in automation and enhancing the operational efficiency, we feel that we should be ahead of our competition. We respect competition, and we are paranoid about competition. We have to be on our toes. I am sharing with you very transparently and candidly the direction and the work that we are doing internally.
That's very helpful. How is Vivo? Are we broadly on track to come in production by Q2? I think Q2 was what we probably mentioned earlier.
In our budget this year, we have taken some part of it into force.
Okay.
Fair. Okay. Fair. And just last one, if you would, you as Saurabh could share the volume numbers for the full year for our segments, the way we share them and everything. Yeah. That's all. Thank you so much.
Smartphone numbers was 28 million last year. 28.3 million. And in 2023-2024, it was 6.4 million. So it's a growth of 38%. Sure. Sure. And similar numbers for other segments as well, TV and lighting as well and appliances, please. TV, there is a decline from 3 million- 2.4 million. In LED bulb, there is a growth. And in other lighting products also, there is a significant volume growth. In washing machines, in semi-automatic, it's flattish. But in fully automatic, top loading, there's an 81% growth from 1.6 million- 2.9 million. In feature phone as a category, it's declining, and geo order had come to an end.
There is a decline. In TWS and all, there is a significant growth of almost 47% from 16 million- 23.7 million. Similarly, in both wearables business, it has grown from 10 million- 13 million, 36% growth. In set-top boxes, there is a growth from 2 million- 4 million. In telecom products, there is a growth from 3.5 million- 7 million. In refrigerators, of course, it was our first year. We dropped a volume of INR 8.6 lakh, which is almost 8% of the Indian market and 40% of the outsourcing opportunity. I think volume numbers largely, except for TVs, have been very good for us. Sure.
Got it. Great. Okay, sir. Great. Thank you so much.
Thank you.
Thank you. We have our next question from the line of Hitarth Kapadia from ValueQuest Investment. Please go ahead.
Yeah. Can you hear me?
I'm in audio.
Yeah. Yeah. We can hear you.
Yeah. First question is on this minority interest of INR 64 crore that has come in this quarter, which business is driving this, and how will this move going forward? Because there's a significant increase.
Yeah. Minority interest is coming on account of our Caliphonix business, which is basically the wearable charitable business, which we have in both. It's also on account of the telecom business where you have a 49% shareholder, that's ATEL. These are the two businesses where we have a minority today. Even the iSmartu business, whereby the 49.9% shareholding of our iSmartu entity is because we have a 50.1% shareholding there. Okay. The second question on the components business, what will be the economics of it? Say payback period, ROCs, asset turns, working capital assets.
Each category is different.
Display modules is different. Saurabh can share with you separately in the financial matrix of that. For camera modules and enclosures and lithium-ion batteries, the teams are working upon it. So it's slightly premature to share those numbers. But we feel and we have that confidence that once we get into it, our blended margins should significantly improve.
Okay. Thank you. That's information. I'll connect to it in subsequently further.
Sure.
Thank you. A reminder to all participants, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Renu Baid from IIFL Capital Services. Please go ahead.
Yeah. Hi. Good evening, team. For my first question, it is on iSmartu. We had a minimum assured PAT of stake for this year.
Have they delivered on the 2 billion+ number? Where are they? If you can share some inputs there on the financial crisis for iSmartu. Second, also on the mobile phones, you did mention 60 million-65 million units targeted. This is for fiscal 2027, right? For fiscal 2026, what kind of volume numbers are we targeting overall for the year, given certain JVs are expected to start contributing the numbers towards the middle of the year?
Renu, responding to the first part of the question, iSmartu has delivered on the committed part in this fiscal as per our agreement. On the second part of the question, yes, we are building a capacity of almost 60 million-65 million, and that's the targeted volume that we are aspiring for in 2026-2027. Our 2025-2026 volume number for smartphones is around 45 million.
Yeah.
There, Renu, depending on the ICT, I can shift you to closer to 40 million-43 million,
43 million-44 million.
Got it. And the payout to iSmartu, will it happen now in fiscal 2026, or what are the timelines there?
Sorry?
There was a payout which was due to iSmartu on achievement of—
Yeah. Basically, as we have agreed for the next three years, based on the achievement of their committed part to us, I think so, yes, there will be further payouts for the next couple of years.
Got it. Got it. Thanks much and rest assured, sir. Thank you.
Thank you.
Thank you. We have our next question from the line of Madhav from Fidelity. Please go ahead.
Yeah. Hi. Good evening. Thank you so much for your time.
My question again on the smartphone business, once the PLI program ends at the end of FY2026, just wanted to understand that it's a, let's say, a 3%-4% margin business where there was about 4%-5% incentive from the government, which obviously we retained some of it, passed some of it to our customers as well. Once this sort of goes away next year, just want to understand, I mean, and we already have a large market share, like you said, in the outsource portion. If you look at 60%-65% out of 90%, do you see any chances of either market share pressure for us into FY2027 or any price pressure to retain the volume in case some competitors get a bit more aggressive? We may have to give some price discount to customers to retain the business. Do you anticipate either of these happening into FY2027?
You see, extremely important there is that we in Dixon have to really enhance our operational efficiency, much ahead of our peers, and also deliver on our 4A into components. Now, with the kind of volume and the relationship that we have, definitely, we will be generating an operating leverage. Please appreciate the PLI contribution to our margin is around 0.6%-0.7%. We feel that the initiatives that we are taking on automation, increasing our efficiency, our large scale, and also our 4A into the components and the ECMS, the benefits and gains for us are going to be much, much more. There can be some time lag here and there, but on an overall basis, I think we're sitting on a much more healthier and comfortable position post-PLI.
Do you think the PLI contributed 0.6%-0.7% to our mobile phone margin business or the EMS division?
Yeah. 0.7% or 0.5%.
0.6% of our margin is our share of PLI income which has been booked.
If we have 4%-5% of sale coming as PLI incentive, which means the balance was getting passed on to the customer, right? I mean, if we were retaining 0.6%, balance 3.4% was being passed on. Is that right?
Yeah. Large client share there.
Yeah.
That's what the crux of my question was, that if you were passing on, let's say, 3%-4%, 3%-4% margin business to the customer, now that that incentive is not there next year, obviously, can competition come in? That's what my question was, that because there will be a 3% price disadvantage.
Other than there, there's n o PLI for anybody after the gap of one year. Whoever is the.
That's exactly my point, actually.
Whoever has a large scale, better operational efficiency, who is able to offer them at a lower cost, etc., because that can only happen once you are more backward integrated, once you have a large scale, once you are more focused on driving operational efficiencies, once you have a better management team, better balance sheet, I think so will be able to drive a larger share of the.
Also, please appreciate, this is the reason very deeply we have been engaging with the customers to form strategic relationships. You see, Transsion is our brand. Our brand has a strategic relationship through JV. Same is the case with Vivo. Motorola relationship is almost at a similar level.
Yeah. Fair enough. Got it. Yep. Thank you.
Thank you.
Thank you. We have our next question from the line of Keyur from ICICI Prudential Life Insurance.
Please go ahead.
Thank you. Hi, team. For great performance. So just question, first question on the IT hardware/laptop side, this Inventec JV and even otherwise with our MOUs, what kind of, let's say, volume, profitability, and revenue we should assume over next two years, both FY? Basically, what would be the ramp-up path over next two years, including FY 2026? That is the first question.
In Inventec JV, we have 60%, and Inventec has 40%. Inventec is one of the top within the top five ODMs in the IT sector. They have large relationships with brands like HP and ASUS, and they also have a large presence in the server market. So we feel that the JV should become operational in Q4 of the current fiscal. There's a factory being set up adjacent to our campus in Chennai.
Initially, this will be focused on PCBA because we will be leveraging the IT PLI too also. They are going to be bringing in here their large relationships into the JV. They will be facilitating our entry into the component side to further leverage IT PLI too because if you see the structure of IT PLI too, the incentive keeps expanding as you keep on localizing more. The revenues we feel in year two can be somewhere in the range of around INR 2,000-odd crores. The opportunity for this is immense because they bring in a lot of strength and a lot of deep relationships, a lot of technology, the high-value-added products like servers to our relationship.
Just one follow-up throughout the left. Basically, our IT hardware segment revenue would be INR 2,000 crore in FY2027. Is that a correct understanding?
No. No. No. No. No. No.
See, there are two parts to it. One is Dixon's own factory under the IT PLI too. That's a separate revenue. Then we are talking about the revenue in the JV. Yeah, these are two separate entities. In the JV, there will be two parts to it. One is the final product being built. It is going to be built to the end customer directly. The second is going to be PCBA and components being done in the JV and being built to the Dixon IT PLI unit. There are two separate revenues too. A part of it is going to be subsumed in Dixon, and the balance is going to be an independent revenue. We feel that in a couple of years, we should be generating almost INR 4,000-odd crore of revenues in both the entities.
Okay. Understood.
Second question on the timeline for our component JV for display modules. When should we expect commercialization and significant billing or contribution to the revenue/EBITDA?
We feel the factory should be ready by Q3 of the current fiscal, that is in October to December quarter. Trial should start sometime in January- March. The actual revenue generation should happen from 2026-2027.
Okay. Noted. Thank you. All the best. We'll get back in the queue.
Thank you. We have our next question from the line of Vipraw Srivastava from Philip Capital. Please go ahead.
Hi. Am I audible?
Yeah. How are you? Audible.
All right. Firstly, on the laptop side, what kind of revenue are you expecting based on your budgeting for FY2026 for the facility coming up and standing for laptops?
We are expecting somewhere between INR 1,200 crore-INR 1,500 crore in the current fiscal.
Okay. Okay. That's noted, sir. Secondly, the kind of volume growth you have given, which is around 40-43 million, by any chance, will it be possible to tell how much would be coming from Motorola out of this on volume terms?
We don't want to share any brand rights for that. All the three, just for your numbers, all the four brands largely. Motorola could get a large growth, and even there will be growth in Xiaomi, Longcheer, which is Oppo and Realme, and also for our Transsion brand, and also the large global US brand as well through our partnership with Compal. All the pipes would grow.
Right. Right. Noted, sir.
Lastly, on the component PLI, the government has given a window of four months to apply for this. What's the status from the JV partner for camera modules? I mean, any thoughts on that, and what's the status there?
That's right. Timeline given is 90 days, and we are working on it. Yeah.
Sure. Sure. Thank you, sir, for that.
Thank you. We have our next question from the line of Anupam Goswami from SUD Life. Please go ahead.
Hi, sir. First question is on the camera and module that you were talking about. You said about component Q3 FY2026, that trial should start. Is it going to be camera and display module both? And what is the bill of material are we looking in this overall? And what kind of volume should we start with? We have a relation with all the brands.
How does the process take place and expand overall as well?
What we referred to and what we stated was that in phase one, we are looking at display modules for mobile. The capacity being set up is 2 million. The teams are now working and trying to get engaged with the prospective customers, which are largely captive, for getting the solutions approved so that we can start supplying to them. Here, what we referred to was display modules for mobile. In phase two, this is going to be double to 4 million. Parallelly in phase one, we are setting up a display module line for laptops. That's the same. For camera modules, I'm not able to share with you any details as such.
Okay. Sir, and sir, 2 million units display.
How do we, sir, this process, if you can explain how the customer engage, what's the timeline, and when can we ramp up to our, let's say, mobile volume? Should we, in the long run, see both in tandem?
Sorry, I didn't get to the last part of your question, please.
In the long run, what sort of volume should we see? How we have ramped up the mobile, should we expect similar line of growth in the model display?
See, first of all, responding to the first part of your question, when a mobile and a smartphone is designed, that's where the camera module—sorry, the display module—is finalized and aligned with the design in the POC stage. It's a six to eight-month cycle for development of the solutions. That's where the company and the teams have started working upon.
As I told you, initially, it's 2 million. We are targeting 43 million-44 million, which we plan to take up to 60 million-65 million. We feel that a large part of what we produce, first 2 million, that is 24 million, and then 48 million to be captive, a part of it might be sold outside. That's the plan.
Thank you. I'll turn back in.
Thank you. We have our next question from the line of Abhishek Ghosh from DSC Mutual Fund. Please go ahead.
Yeah. Hi, sir. Thanks for the opportunity. Sir, in terms of the mobile landscape, you spoke about INR 13.5 crore Android phones market and about INR 9 crore is something which is outsourced. For the residual 4-4.5, is that likely to be in-house only, or is there a point at which that can also be outsourced?
Is that something which should be looked at from a three to five-year perspective? Any thoughts on that, sir?
So Abhishek, basically, there are three brands which are going in-house. It is Samsung. And with Samsung, we already have a large relationship, wherein we are doing equity over there. Let's say Samsung does around 40-odd million. We are doing 12 million in-house, but that's a different relationship. That I'm not counting in this number. Then it's Oppo. With Oppo, we already have a large relationship, and I hope that that will keep on enhancing and deepening. Third is Vivo. Vivo, we have already finalized a strategic relationship. These are the things. I don't think Samsung is an outsourcing opportunity. I don't think so. Oppo and Vivo are expanding. Yeah.
Essentially, sir, you were saying you will go up to X of exports.
You will do something like INR 5.5 crore out of the total INR 9 crore opportunity. That's the way to look at it in India.
See, what we feel is in the current year, we're targeting to do 44 million. Out of this 44 million, I feel almost 10 million-12 million is going to be exports. Because for our anchor customers, the order book for exports from North America is extremely heavy. Also, for Transsion brand, we have started exporting to Africa. Please appreciate in Africa, in many markets, we have a share as high as 80%. We already started exporting, and we feel in the current year, we should do almost 2 million exports.
I feel on an overall basis, almost 10 million-12 million is going to be exports for us, which we are very deeply working that these quantities should expand significantly in 2026-2027. Because that is what we want to crack, and that our cost comparativeness is globally comparable so that the global market now, after acquiring a very large share of the domestic market, we are attempting to get into. That is what we are aspiring.
Okay. Sir, in the INR 6 crore-INR 6.5 crore range that you have given, export is something not explicitly built in to the extent you would have wanted. I am thinking if that comes in, is there an upside to that number of INR 6 crore-INR 6.5 crore if export kind of works out the way you are expecting it to?
Yeah, Abhishek, that can be an upside.
You see, if we are able to crack it, then it can be a big upside.
Not in 2027, but at least in 2028, you will have growth coming in from the exports. That is the way you want to look at it.
See, that is the trajectory for Dixon's growth now.
Sure. Sure. Okay. Thank you so much, and wish you all the best.
Thank you. Thank you.
Thank you. We have our next question from the line of Siddhartha Bera from Nomura. Please go ahead.
Yes, sir. Thanks for the opportunity. On this new deal with Alcatel and Al, do you have some targets in mind about how much are they also looking to sort of produce for the next couple of years?
We are just starting the relationship. I think let's give it some time.
I think it will not be fair for me to put in the number there. Yeah. The commercial process is just starting in the current month.
Okay. Okay. Secondly, sir, on this profitability on your consumer electronics and home appliances segment for the quarter, because some of these improvements that you talked about are sort of continuous process. Will it be fair to assume that part of it will sort of sustain going ahead and at an annual level also, you would want to target some of these numbers, or there will be some one-off which we should normalize going ahead?
Yes.
Basically, Siddhartha, as far as the refrigerator business is concerned, we have a very strong order book and we're further expanding our capacity from 1.2 million- 2 million, and we're getting into other categories, which was mentioned by sir in the opening remarks. We are expecting a 50% growth in that category. Please understand that's a 100% ODM business for us. The margin profile will be around somewhere closer to 9.5%-10.5% kind of a range. That order book, that growth, that margin profile is clearly sustainable. Now, TVs you mentioned, yes, there are challenges, but we are trying to get into new categories, trying to do more ODM. We have really worked on the cost optimization here, cost controls here. Let's see how the TV industry pans out.
Yeah, broadly, as far as refrigerators are concerned, you should take it as broadly sustainable. In fact, that could be a growing vertical for us in this segment here.
Sir, what about the home appliance segment?
Home appliances also, yeah, we continue to do well also as far as fully automatic top loaders are concerned. The numbers are now we are doing a steady state of decent volumes every month. Of course, the margin expansion has happened on account of more value-added offerings, innovation, as well as the value-engaging efforts. We mentioned that we will now get into other categories with fully automatic front loaders as well, robotic vacuum cleaners. All of that will be done at the same facility. That should also lead to more utilization of that capacity infrastructure.
Margin growth-wise, as well as the revenue growth-wise, it should be sustainable. In fact, there should be also growth in this category in this year.
Got it. That is very helpful. Lastly, any questions?
Sorry to interrupt, Mr. Siddhartha. May I please request you to rejoin with you?
Sure. Sure.
Thank you so much. We have our next question from the line of Achal Lohade from Nuvama Institutional Equities. Please go ahead.
Yeah. Good evening, sir. Thank you for the opportunity. First, please, on mobile, I just wanted to check what are yielding mobile segment in terms of the recovery rate or rejection rate, if you could highlight, and how does it stack up versus globally or Chinese players?
Recovery rate, meaning you are talking about the in-process rejection or?
Yeah, in-process rejection, sir.
The in-process rejection across different brands is slightly different.
I don't want to give the specific numbers, but any two brands. Broadly lined up, it is between 0.2%-0.3% to 0.5%-0.6%.
Yeah, but broadly, to answer your question, it's at a global level. It's at a global level. Some of the best companies which are manufacturing mobiles today, and we are broadly at a similar level. We have the same infrastructure. We have the same machineries, the same throughput of those machineries. Clearly, we are broadly at the same level, yeah.
Understood. The second question I had with respect to the PLI, if you could help us understand for FY2025, what is the gross and the net number, and how much does it pertain to the mobile segment? I remember we had certain claims with respect to the unclaimed PLI. Any update on the same answer? That's all, sir.
Thank you.
Yeah, so as sir mentioned some time back that whatever mobile revenues we have, around 0.6% of those mobile revenues is the PLI share of income, which is our share of income which has been booked into this profitability. So broadly, you can calculate those numbers. Overall, yes, as far as the status is concerned, mobile, we have got our PLI till December 2023. January to March 2024 is expected to come anytime. We have already filed a claim for part of this current financial year as well. The government will take that claim as well.
As far as the other PLIs are concerned, which is on telecom side, lighting side, as well as our AC inverter controller board, we have got a claim till last financial year. We have now filed a claim for the current financial year or the 2024-2025 as well because it is mostly done on the achievement of the revenues at the year-end level. Yeah, and the IT hardware we have just started. We have done the CapEx. As and when the revenues come into the system, we will file a claim for IT hardware revenues as well.
Understood. Understood. That is great. I will fall back in the queue for follow-ups. Thank you.
Thank you. We have our next question from the line of Indrajit Agarwal from CLSA. Please go ahead.
Hi, sir. Thank you for the opportunity. One question on the realization for mobile phones.
As we ramp up our volumes from 28- 42 and then let's say to 60+ , given the brand mix that you see, do you think there is a scope for realization sizing as well, or those remain probably stable?
Yeah, yeah. We feel confident that the realization would keep going up on account of the mix change. If you look at some of the large U.S. global brands that we have, the realization is much, much higher than the realization that we have across the other three large brands. Even as we get into the export markets, there also the realization of the smartphones is much higher.
Clearly, also the whole market and demand is migrating from 4G to 5G. There is a unit value significantly higher. Unit sales realization will increase.
In fact, it has been going up in the last couple of years. It did not further go up in 2026.
Sure. And my second question is on the new business that is on industrial EMS. Any update on that? Where are we? What kind of targets do you have over the next three to five years?
So industrial EMS, our first hopefully venture is going to be on the chargers. We are tied up with a startup for charging stations. In our Tirupati plant, we are targeting to start production for this particular venture. That is the first opportunity that we are pursuing.
All right. Thank you. That is all from my side.
Thank you. We have our next question from the line of Girish from Morgan Stanley. Please go ahead.
Yes, sir. Thanks for the opportunity. Sorry, I joined a bit late if I have missed this.
Historically, you've spoken about over 150 basis points of margin expansion courtesy of the component PLI that you're doing on a blended basis. Does that number still hold, or given the reassessment, is that number raised up or down? The second one I wanted to understand is the CapEx that you expect to incur for FY2026 and 2027, given the large customer onboarding and volumes that you expect across verticals like mobile and IT and telecom. Thanks.
Yeah. To answer your second question, Girish, the CapEx intensity, the 2024-2025, we did a CapEx of almost INR 900-odd crore. My sense is in that 2024-2025-2026, the CapEx should be in a similar range of around INR 900 crore-INR 1,000 crore, which we have adequate cash flows and trade lines to support.
On the first part of your question, yeah, there is going to be a significant, the margin profile for the component business is significantly higher. I don't want to share the specific numbers at this stage, but let me assure the house that the margin profile of the component business is significantly higher.
Sure. And also our own internal efforts on efficiency or more automation. Yeah. That should lead to margin expansion and also the operating leverage and also higher contribution of our ODM business like refrigerators and also telecom business. Of course, telecom is not an ODM business, but that's also, we have an order book and we have decent margins there. Combination of all that put together, but large part of that will be driven through this backward integration strategy, these four components that we have narrowed down.
We've already done our numbers for camera modules and displays. Another two, we are, of course, we'll be doing our numbers. Broadly, all the components generally come to a very good margin profile, and that should lead to a significant margin expansion at a company level.
Sorry if I missed this again. On display fab, where is the discussion with the government on ISM 2.0? As far as our partnership is concerned or our thought process on that CapEx is concerned, is there an update on that, please? Thanks.
We are awaiting the ISM 2 to be rolled out. We are not very sure of the timeline for that. That's where it is. We're waiting for ISM 2 because that particular foray is hinging upon the rollout of ISM 2 and what that policy framework is going to be like.
Sure. Thanks, sir.
All the best. Thank you.
Thank you.
See you.
We have our next question from the line of Bharat Shah from ASK Investment Managers. Please go ahead.
Yeah. Hi, Atulji.
Good evening, sir.
Good evening.
Good evening. Just one question. This Vivo relationship, the joint venture, it is in books for almost five, six months now. Why is it getting delayed so far?
You see, we have already signed the binding term sheet with them. The teams are working upon the definitive agreement. Very shortly, we will be filing our applications for PN3 waiver. Now, this PN3 waiver with the government, it is a long process. It involves a huge interministerial effort. What we have targeted is that these approvals should come sometime in the next five months- six months.
We have taken some small portion in our current fiscal budget for the last quarter of January to March.
Out of 65 million that we are talking about?
No, no. Here I am talking about the current fiscal plan of 43 million-44 million.
No, no. I understand. But out of, sorry, what is the Vivo output expected to be?
So Vivo output, sir, will fully come in 2026-2027. Yeah. And that can be broadly anywhere between somewhere around 15 milion-16 million.
No, sorry, Atul. I did not get that. How much is Vivo at a full level expected output to be?
The total output of there is around 28 million-30 million. As per our term sheet, 67% has to be done in GE. We are expecting around 18 million-20 million to come in the GE.
And that more or less fully should come in 2026-2027?
That's what we expect. That's what you expect.
And a part of it in the last quarter of the current year?
That's right. That's right. That's right.
Per se, that is on track, right? For the procedures and all that.
That's right. Yeah, that's right. Subject to the approval, sir. Yeah.
Okay. One last thing. Several of you said the margin on the mobile phones, 0.6% addition due to PLI. Assuming the PLI scheme does indeed get vacated, our effort to mitigate that margin impact, partly due to operating leverage, partly due to other efficiencies, and all the other cost initiatives that we are taking. Purely on mobile phone, that impact of the PLI margin of 0.6% for the year in entirety of 2026-2027, we should be able to mitigate for that 0.6%?
Yes, sir. We are quite confident.
Yeah, we are confident, sir.
It will be largely driven by backward integration and also the efforts on the efficiency, the automation. We are working towards it, sir. We are really working towards it. We think we will be fairly confident on that.
Okay. Thank you. All the very best. Thank you.
Thank you, sir. Thank you.
Thank you, sir.
Thank you. We have our next question from the line of Neel Mehta from Equirus Securities. Please go ahead.
Yeah, sir. Thank you for the opportunity. I congratulate you on a good set of numbers. Sir, I just wanted to understand that Xiaomi is losing somewhere a bit of market share. Not the exact, but the ballpark level, can you just guide the volume numbers that possibly Xiaomi has turned for the FY2025 and similarly for the Motorola as well?
We cannot share any specific numbers. Please understand, we are an EMS company. That is the reason why it is important that we should have multiple customers. That is the big risky strategy for us, and that is the continuous and the most critical process for us. Xiaomi, for some reason, has lost market share. Of course, others are gaining market share, and we happen to work with most of the customers in the Android ecosystem. At a broad level, we are still, but we end up gaining an overall large share in the overall market here.
Thank you, sir.
Thank you. Ladies and gentlemen, that would be the last question for today. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital for closing comments. Over to you, ma'am.
Yes, I would like to thank all the participants and particularly the management for answering all the queries and giving us an opportunity to host the call. Thank you very much, sir. Wish you all the very best.
Thank you, Bhoomika.
Thank you, Bhoomika. Thanks, everyone. Thank you. Thank you. Really appreciate it.
Thank you. On behalf of DAM Capital , that concludes this conference. Thank you for joining us. You may now disconnect your line.