Revenue growth to be quite significant for next 2 financial years: Saurabh Gupta, Dixon Technologies
Synopsis
I do not want to give you guidance on any number, but clearly the order book looks extremely healthy, not only across mobile vertical which is the largest trigger for our growth, I think so even IT hardware opportunities looking very promising.
Saurabh Gupta: So, my sense is more so not so acquisitions I would say, but clearly we will be doing a lot of partnerships and JVs with various ODM partners and also various component.
We look for those partnerships. So, clearly one of the partnerships that we have signed recently is with HKC, which is one of the largest globally displayed manufacturing company and we plan to get into the mobile displays initially, setting up a capacity of almost 20 million and in the second phase we will take it to almost 40-45 million.
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So, going forward for Dixon I think so the way forward for us is to do more of JVs and such kind of partnerships with ODMs as well as with partners who can partner with us on the component side.
How would your revenue mix look like in the next three to four years, the direction which you guys are taking, laptops, other kind of displays?
Saurabh Gupta: I do not want to give you guidance on any number, but clearly the order book looks extremely healthy, not only across mobile vertical which is the largest trigger for our growth, I think so even IT hardware opportunities looking very promising.
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Saurabh Gupta: Yes, it will be significantly margin accretive. It will be ROC accretive. We will have decent paybacks on this. And clearly, we think there is a strong business case because if you look at any smartphone, almost 10% of the component which goes into a smartphone is actually display and there is a good duty arbitrage today on this, so which makes it a strong business case. And we already have a large customer base in this category. We have a large capacity of almost 50% of the Android smartphone market in India. And we will leverage with the same set of customers. So, yes, it is very promising, yes.
Let us also understand a little bit now as to what is going to be your key growth driver apart from mobile phones. What is it that you are looking at by way of individual segments that could drive your growth?
Saurabh Gupta: Yes, so every vertical we have a plan. Every vertical, we have a backward integration plan. But I think so after mobiles, it will be led by IT hardware which, as I mentioned to you, we have close contracts with two of the largest brands, Lenovo and Acer and, of course, we are in final discussion with some other large global brands and we plan to conclude with them as well and hopefully, we should start manufacturing from them by next financial year.
So, not this financial year, but definitely by next financial year, even IT hardware should start contributing a significant portion of our revenues and after mobiles I think so it is the second largest opportunity for us and that you will see in the next couple of years.
Just to get in some numbers here, you are aiming for 36 to 40 million mobile phone production by FY26. What then is the revenue scalability that we are looking at?
Saurabh Gupta: It will be quite big. I do not want to give a number. But yes, you can clearly calculate that. Last year, we did 6.7 million smartphones. This year we are looking at 28-29 million phones. And hopefully next year, the kind of number that you just mentioned, a 20-25% growth on those numbers on 28-29 million, so basically, yes, the revenue potential can be quite significant and that mobile as a category would be almost 60-65% of our revenues going forward. So, yes, overall, we are looking for a very strong growth in the revenues as well as profitability.
Saurabh Gupta: So, our industry and we also have given a wish list to the government. Of course, the government, the huge focus on electronics as a sector, clearly the policy initiatives that the government has taken over the years is clearly aligned towards making India part of the global value chains.
One, of course, catering to the large domestic market as well. So, what we are hearing is, of course, the government can look at bringing about that lower tax rate for manufacturing companies once again. Second, what we are also hearing is that and there has been newspaper articles on that as well that there might be a component PLI scheme coming in for critical components because if you look at any mobile phone almost 50% of the non-semiconductor components is almost equivalent to 1,50,000, 1,60,000 crores.
So, the government is really committed that there should be more deepening of manufacturing in India. There should be more value addition in India. And now the scale is getting created in India as far as mobile is concerned.
So, they want to take it by bringing in a more PLI specifically for electronic components and also if you look at as part of our strategy in line with our backward integration, we have also already forwarded into displays. We are also looking for partners on other components of mobiles. So, clearly, I think so that should be a big positive for the industry and for Dixon.
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