Stocks of electronics manufacturing services companies have been major outperformers, with four of the top eight listed majors by market capitalisation doubling their value over the past 12 months.
The biggest gainer in this space has been the market leader, Dixon Technologies (India), which is up nearly threefold.
Although investor interest in the sector and the stock is expected to remain high, sustaining the rally will be crucial given that valuations are in the expensive zone.
The extent of further gains for these companies will depend on their ability to meet lofty expectations.
While there have been multiple triggers for growth over the past year, the near-term trigger for Dixon is the April-June quarter (Q1) results and the outlook for 2024-25 (FY25).
Dixon is expected to lead the sector in Q1FY25 with revenue growth of 77-78 per cent, while its operating and net profit are likely to rise in the 61-77 per cent range.
Analysts Deepak Agarwal and Nikhil Kandoi of JM Financial Research expect Dixon to outperform in Q1FY25 mainly due to the execution of Xiaomi orders and the ramping up of Motorola sales.
They expect this will result in higher mobile phone volumes and positive operating leverage.
