Dixon Technologies to Acquire Majority Stake in Ismartu, Shares Surge

• ByStartupStory     |    April 9, 2024

Dixon Technologies, a prominent player in electronic goods contract manufacturing, revealed today its signing of a share purchase agreement with Ismartu In Pte. Ltd., outlining its acquisition plan to secure up to 56% equity stake in the company across two tranches.

According to the agreement, in the initial tranche, Dixon will acquire 50.1% equity stake in Ismartu India Pvt. Ltd. This comprises 1.38 crore equity shares, with a significant portion being purchased from Ismartu In Pte Ltd., in addition to shares from Transsion Technology Ltd. and 5A Advisors LLP. The transaction, valued at Rs 238.36 crore, is subject to pre-closing and post-closing adjustments.

The subsequent tranche will witness Dixon acquiring a minimum of 1.6% and a maximum of 5.9% equity stake, contingent upon Ismartu achieving a profit after tax (PAT) milestone of Rs 200 crore by the financial year 2026. The acquisition, slated for completion by the financial year 2027, will be determined based on a valuation of 20 times the profit after tax of Ismartu for the financial year 2026.

Ismartu, headquartered in Noida, specializes in manufacturing, assembly, sale, distribution, import, and export of mobile phones, tablets, electronic devices, and components. The acquisition aligns seamlessly with Dixon’s growth strategy, enabling it to expand its foothold in the consumer electronics market.

The bullish response from investors is reflected in the surge of Dixon Technologies shares by 3.16%, reaching Rs 7877.95 against the previous close of Rs 7636.45 on the Bombay Stock Exchange (BSE). The company’s market capitalization surged to Rs 46,012 crore, showcasing market confidence in the acquisition’s potential to enhance Dixon’s market position and drive future growth.

Technical indicators suggest a robust performance by Dixon Technologies, with its relative strength index (RSI) at 64.4, indicating balanced trading conditions. Additionally, the shares are trading above various moving averages, further underlining positive market sentiment.

The acquisition marks a significant milestone for Dixon Technologies (India), reinforcing its status as a leading design-focused solutions provider in the consumer durables, lighting, and mobile phones markets. With a clear strategic vision and a commitment to innovation, Dixon is poised for continued success in the dynamic landscape of consumer electronics.

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