Market Shock: Why Dixon Technologies, CG Power, and Their Peers Are Crashing Hard!
CG Power: Shares of Dixon Technologies Ltd. experienced a significant decline of over 8% on Wednesday, January 8th. Similarly, other Electronic Manufacturing Companies such as Kaynes Tech, PG Electroplast, and CG Power also saw losses ranging from 4% to 8% on the same day.
The drop in these shares followed an announcement by the Tata Group on Tuesday, revealing their plan to invest $18 billion in the electronics and semiconductors sector. The conglomerate intends to establish nine new factories within the next two years. Tata Group Chairman N Chandrasekaran described this move as a strategic long-term investment.
In addition, Bloomberg reported on Wednesday that Dixon Technologies, along with Apple supplier Foxconn, have requested the government to release the remaining dues under the Production Linked Incentive (PLI) scheme. It was disclosed that a portion of the ₹41,000 crore allocated by the government for subsidies remains unutilized due to some companies failing to meet production targets. Dixon Technologies stands to receive subsidies worth ₹100 crore if the outstanding dues are settled.
Furthermore, the government is currently investigating whether Dixon Technologies made fresh investments to manufacture Xiaomi smartphones or if machinery was relocated from another facility that previously produced the devices. This information was sourced from Bloomberg’s report.
Dixon’s shares experienced significant losses during Wednesday’s trading session, making them one of the biggest losers in the market. According to the brokerage, Dixon has the potential to reach levels of ₹22,256, which is currently the highest price target for the stock.
Nomura predicts that Dixon will greatly benefit from a projected 55% year-on-year increase in mobile exports to $26 billion by the end of the financial year 2026.
Of the 31 analysts covering Dixon Technologies, 15 have given it a buy rating, nine recommend holding, and seven suggest holding. Despite this, Dixon’s shares closed 8.4% lower at ₹16,900, while CG Power’s shares ended 3.5% lower at ₹692.7. Kaynes Tech also saw a 4.1% decrease in its shares, closing at ₹6,950 on Wednesday. It is worth noting that all three companies have experienced significant gains over the past year, with Dixon up 180% in 2024 and Kaynes Tech also seeing increases of over 150%.
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Disclaimer: This blog post is for informational purposes only and should not be considered financial advice. Investors should conduct thorough research and consult with a qualified financial advisor before making any investment decisions.