Dixon Technologies (India) Limited ($DIXON)

Ladies and gentlemen, good day, and welcome to the Dixon Technologies' Q4 FY '26 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Tanay Shah from DAM Capital. Thank you, and over to you, sir.

Thank you, Iqra. Good evening, everyone. Welcome to Dixon Technologies Q4 and FY '26 Earnings Call. Today, we have the management represented by Mr. Atul Lall, Vice Chairman and Managing Director; and Mr. Saurabh Gupta, Director and Group CFO. At this point, I will hand over the floor to Mr. Lall for hi initial remarks, post which we will open up the floor for Q&A. Thank you, and over to you, sir.

Thank you, Tanay. Good evening, everyone. This is Atul Lall, and joining me today is our Director and Group CFO, Saurabh Gupta.

Good evening, everybody.

I would like to welcome warmly all our stakeholders to discuss our Q4 and 12-month performance for financial year '25-'26 and future growth outlook. And the key highlights for the quarter are as follows: The revenues for the quarter ended March 31, 2026 was INR 10,520 crores. EBITDA excluding exception gain for the quarter was INR 418 crores. PAT after minority interest and excluding exceptional gain for the quarter was INR 192 crores. The key highlights for the whole year are as follows. Revenues for the year ended March 31, 2026, were INR 48,893 crores against INR 38,880 crores in the same period last year. That's a growth of 26%. EBITDA excluding exceptional gain for the year was INR 1,887 crores against INR 1,528 crores in the same period, which is a growth of 23%. PAT after minority interest, excluding exceptional gain for the year, was INR 845 crores against INR 706 crores in the same period last year, a growth of 20%. Starting March '26, global macroeconomic landscape has undergone a dramatic transformation, including rising Middle East tensions and concerns around a potential U.S.-Iran escalation, leading to disruption across supply chains, freight, energy, ForEx and commodity prices. Q4 revenues remained flat due to geopolitical concerns, softer consumer demand, inventory rationalization by brands, elevated input costs, majorly impacting the smartphone and IT hardware segment. Electronics Industries continue to face inflationary pressure in key components such as memory chips and semiconductor linked inputs, driven by AI-led demand and supply constraints resulting in cautious procurement behavior towards brands. Despite near-term headwinds, we continue to strengthen our customer partnerships and expand capacities across segments while accelerating our backward integration and localization strategy. Our priorities remain clear to sustain growth momentum, strengthening our competitive positioning and continue to invest in talent capabilities enhancement. We will be expanding the capacities of camera module and a subsidiary [indiscernible], which is an ECMS beneficiary for smartphones from 70 million annually to around 180 million to 190 million annually over the next 15 to 18 months, largely catering to our captive smartphone volumes in addition to deepening the level of manufacturing, capturing more value add in India. We have received PM3 and ECMS approval for 7426 display module JV with HPC. Construction of our display facility is completed and installation of machineries are ongoing for mobiles, IT hardware products and automotive displays. The response from various brands is very encouraging. The trials will start from beginning of Q3 and mass production will commence from end of Q3, beginning of Q4 this fiscal. We remain focused to strengthen capital efficiency and balance sheet quality, improved asset utilization, operating leverage and disciplined capital allocation supported healthy ROCE and ROE of 44.8% and 28.1%, respectively. Overall working capital efficiency led to stronger cash flow generation and working capital cycle of negative 8 days. We remain focused on sustaining profitable growth while maintaining strong return ratios and balance sheet discipline. We remain confident in the long-term Indian PMS opportunity supported by supply chain diversification, increased localization, supportive government policies, PLI-led scale expansion and continue to create a strong multiyear growth runway for the industry. Now I'll share with you the business performance and insights in each of the segments. Mobile and other EMS businesses. Revenue for the quarter for mobile and other EMS business was INR 9,485 crores and operating profit of INR 337 crores. Mobile industry has seen some headwinds from memory price inflation and demand moderation in the last 6 months. Over the past few weeks, supply-demand dynamics are becoming more balanced, and we are beginning to see an improvement in customer ordering pattern, and we expect a high double-digit growth quarter-on-quarter in the smartphones volume along with growth in selling prices by 12% to 15%. We strongly feel that the momentum will sustain for the balance part of the fiscal year. We expect a strong growth in volume for our existing U.S. brand, and we expect a significant uptick in volumes for our [indiscernible] on export for largely feature phones and also smartphones mainly for Africa market from mid-Q2 and will start manufacturing smartphones for HMD in Q1. Our 400,000 square feet facility for 6 [indiscernible] JV for manufacturing of smartphones and other electronic products is expected to start operations by Q3, which will meaningfully strengthen our execution capabilities. We are having robust order book for smartphones and also in advanced discussion with them for adding other product categories in the JV Construction of our 1 million square feet facility in Noida with higher capacities for our anchor customers is nearing completion, and we expect the operation to commence by Q2 this fiscal. Telecom and networking products. The segment continued its strong growth trajectory on the back of expanding customer relationships and higher execution across key product categories, driven by increasing network infrastructure investments, including capturing emerging opportunities and growing localization of telecom equipment manufacturing. We have commenced manufacturing of highly complex telecom and backhaul microwave radios and plan to initiate exports in this fiscal. We have commissioned a new manufacturing plant for capacity expansion and increased warehousing area to support the growth trajectory. Our strategy in this vertical is to move up the value chain from pure EMS to design-led solution-centric partnership and have now entered into joint design and manufacturing model with a key customer, enabling greater backward integration, localizing a higher share of the BOM. We expect this vertical to deliver high double-digit revenue growth in the current fiscal. IT hardware products. The segment delivered a healthy performance for the quarter under review, and we expect 3x growth in the revenues in the current fiscal against last year with a huge uptake in order books from all customers. Our dedicated IT hardware products manufacturing unit in Chennai has successfully established stabilized mass production of laptops and all-in-ones and has secured orders for desktop from one of our customers. The execution of this should start in Q2 of this fiscal. We have also started manufacturing tablets in addition to laptops for our existing customer. Our new facility adjacent to our existing facility under our 60-40 JV within Mintecherman is progressing well and expected to go into mass production in Q3 of the current fiscal. In line with our backward integration plans, we'll commence SSD manufacturing in Q2 and display modules with HTC from end of Q3, beginning Q4. And we're also exploring other critical components such as power supply and mechanicals, which will enhance value addition and margins. We are also in discussion with a JV partner to participate in the fast-growing server opportunity and to move from end client IT hardware into data center and enterprise infrastructure hardware, which is supported by strong government policy tailwinds on server manufacturing and backward integration, including a clear push on localization and a tax holiday framework for the same, which meaningfully improves the viability and return profile of India-based server and component manufacturing. All the work taken together, these drivers give us strong visibility on robust growth in the vertical and potential to make it a meaningful pillar of Dixon's overall portfolio over the next few years. Home appliances, revenue for the quarter was INR 329 crores and operating profit was INR 31 crores. Semi-automatic washing machines continue to deliver robust growth. We have started manufacturing semi-aut washing machines in 16 and 18 kg capacity, which is first across the industry. Fully automatic washing machine business is scaling well on the back of healthy demand and deeper engagements with key brands. We have a healthy order book in emerging categories such as robotic vacuum cleaners, where we see strong potential for multiyear growth and also deeply working on introduction of other appliances like dishwashers, microwaves and kitchen and chimneys, which would help us to offer a complete home appliances portfolio. This segment continues to demonstrate strong ODM capability across design support, testing, manufacturing, product customization, value-added offering, increase in automation, which will enhance margins and improved customer stickiness. Addition of our new manufacturing facility in [indiscernible] will expand our capacities from 0.6 million units per annum by another 0.3 million units, including fully automatic front-loading washing machine, which would be launched by end of Q2 this financial year. So this is the first Indian company launching the ODM solution. Lighting, the JV with signify continues to deliver strong revenue growth, and we expect to come in on other appliances like dishwashers, microwave [indiscernible] which would help operate segmentize technology leadership. The segment connectivity across designs in a an automation and using automation in enhancement there building our share and also [indiscernible] late metal lite positioning us firmly as the former player in the lighting industry, which is missing consolidation at a rapid scale. pursuing an active product mix improvement strategy, we are continuously adding premium metal and professional leading products and Luminas to our portfolio. We have received 2 export orders from one of the largest U.S. and European retail chain for the supply it will start getting executed from Q2 and are also in discussions throughout the product categories. Consumer electronics, that is LED TV and refrigerators, remaining for the quarter under review was INR 697 crores with an operating profit of INR 40 crores. The quarter under review saw a temporary slowdown in industry demand due to geopolitical concerns and rising input costs, but we have actively procured advance orders from customers with better priced offerings for the upcoming quarters. Our focus remains a large screen, smart, connected and premium models where we can differentiate through manufacturing quality, platform capabilities, cost efficiency and technological upgradation. We have launched production of high-end mini-LED TVs and we'll be shifting it to ODMs modern by Q2 and also introducing soundbar CDs, enabling our customers to talk on the fast-growing premium segments. Refrigerators, [indiscernible] are transition to revised BE norms and upgraded energy efficiency standards for compressors. The split industry we space in these tested of the peak summer demand season beginning in January. As a result, several brands focused on liquidating investing inventory older BE ratings and limited procurement under the new norms. We continue to see traction with healthy orders and improved [indiscernible] book and direct role in [indiscernible], that's 50 and 100 liters. Our ODM capabilities are scaling well and offer more differentiated value-added design and support faster model refreshes. To support future work, we're expanding our current facility by another 375,000 square feet, which will also enable manufacturing of 2-door refrigerators, deal freezers, [indiscernible] with meaningful opportunity to move up the value chain, expand wallet share with customers and build a broader appliance platform over the period. Rexxam-Dixon Electronics are 60-40 JV with Rexxam in Japan for AC PCB continues to perform well, delivering healthy growth along with a strong cash flow and a strong ROCE, with a stable and long-term pationship with our anchor customer. We also added a new facility in Chennai, strategically located closer to our anchor customer, which expand our capacity and strengthen our partnership. Hearables and wearables is vertical operated through our JV, with margin marketing continues to see broad-based growth, with solid balance sheet and healthy cash flow. Generation, the business has scaled well with our existing product portfolio and has now entered the next phase of expansion, by adding new growth categories, so the dash cams, power bank, smart watches and other adjacent facilities, which should improve capacity utilization and operating leverage across JV's manufacturing footprint. High-end special EMS business as a part of our next phase of transformational growth, we have partnered with a leading global management consulting firm for designing a comprehensive multi-year strategic road map to build scale specialty high-margin EMS business including M&A opportunities focused on aerospace, defense, automotive, medical and industrial verticals. This initiative was focused on enterprise the most attractive high-growth and high-value products and above segments defining a differentiated technology and capability road map and creating a robust in using framework spine capital allocation, talent development, strategic partnerships and market expansion with the aim to accelerate Dixon's evolution into a complete competitive manufacturing platform. With that, I'll conclude my remarks, and both me and Saurabh are happy to take any questions. Thank you.

[Operator Instructions] The first question is from the line of Pankaj Tibrewal from Akida Asset Manager.

Just quickly 2, 3 questions. One, first, congratulations on great cash flow conversion. Preliminary look will suggest that cash flow has been very strong despite of earnings with a little. So continue doing that. On '27, I just wanted to get your sense on [Technical Difficulty]

I'm sorry to interrupt Pankaj, can you please use your handset phone? Your voice is fluctuating.

I'm using the handset only.

Okay. And then please speak a louder.

So on the mobile side, can you give us some color on how we are looking at the ramp-up on volumes in FY '27. And what are the other areas of growth this year? We are targeting in terms of [indiscernible] hardware, I remember last time you spoke about that INR 3,500 crores, INR 4,000 crores would be possible in this year, FY '27, [indiscernible] on the camera module. Can you just take us through some of the growth drivers for this year? And also the Vivo JV, any thoughts on that? How should we think about from that perspective? And whether your volume which you will probably kind of talk about, does it include Vivo? It doesn't include Vivo? Just some color on that, so that we are able to help understand on the growth side for that.

Yes. Sure, Pankajji. So the we have really focused on our balance sheet this trend. And in spite of a sluggish business environment, we have generated after doing a CapEx of almost INR 1,058 crores, a free cash of INR 700-plus crores. The ROCE is 44.8% and working capital operating cycle is negative 8 days. So that way, the balance sheet is very strong for triggering any kind of growth.

Absolutely.

As far as the '27 business plan growth number concerned, and here, I'm talking on mobile without Vivo, we have closed almost INR 32-odd million in the current fiscal. We feel that the overall volumes without Vivo is going to be almost similar, okay, because there is an overall decline due to increase in the memory prices and the ASP going up significantly. As far as Vivo is concerned, we are deeply engaged with the government. We feel that we are very close to it. And that's where the status is. We reiterate that we feel that we are very, very close to it.

And if Vivo comes, what could be the volumes? .

So it depends on the time line. So on an annualized basis, 67% of what we Vivo sale [indiscernible] can be added on annual. So that's the number. Apart from that, on the feature phone side, there's a significant upside because they're going to be starting exports of feature phone under our subsidiary, [indiscernible] Africa. So that number will take us up to almost 50 million units. Further, we are expecting [indiscernible] mobile to be rolled out. Let's see what will be the structure and plant of it. We understand the focus is going to be more for global markets. If that happens, then I see that beyond Vivo and beyond iSmart Vivo, another 4 million to 5 million units can be added. So I'm giving you the overall picture and direction. As for the mobile phone. IT products, the business looks very healthy. We have created more capacities. We have deep relationships with top 4 brands in the country, the global brands. And we feel that our revenue in this fiscal is going to be more than INR 4,000 crores. In our camera model acquisition of QTech, we are expanding capacity from present 70 million to 80 million to almost 190 million. Last year, on an annualized basis, we had a revenue of INR 1,700 crores. We are targeting a revenue of almost INR 2,500 crores in that business. As far as the display is concerned, the building is ready, the machine is getting installed. We plan to start the trials in Q3 of this fiscal. And Q4, the commercial production is going to start. I'm not putting in the numbers to that in the current fiscal. The other triggers of growth, the telecom network business is doing extremely well. We have grown from INR 3,600 crores to INR 5,000 crores in the current fiscal. We are targeting almost INR 7,500 crores, INR 8,000 crores in '26-'27. That's another major trigger of growth. In lighting, it was a laggard for us, we did almost INR 800 crores, INR 850 crores. The next year target is almost INR 1,700 crores. We expect 2x. After we have formed the JV with Signify. And then there are further additions are Inventec with JV start iterating numbers from Q3 of the current fiscal. In that, we're going to be setting up the SSD module line, which is going to further generate the numbers. So these are all figures of growth, which have been planned, and they're on the execution board, Pankajji.

Okay. Just last question on the mobile side. Is it fair to say that because of the memory chip pricing going up and also your product realization going up the top line growth could be much high in the volume growth, which you will see?

That's right. That's right.

So we expect, Pankaj, the revenue growth should be at least 12%, 15% higher if not more.

That was not the case for the last few years where volume was equal to the top line growth. Is that a fair understanding?

And once on the Vivo thing comes into the system, there, we are hoping that the selling prices would be better than our existing weighted average selling price of the current portfolio.

Okay. Okay. So that will be an aided one from an overall realization perspective?

So the margins may optically can look lower, but the revenue-wise, the upside on that.

Next question is from the line of Aditya Bhartia from Investec.

So my first question is on the PLI scheme coming to an end on the mobile phone side. How the conversations with customers? Is it only the element that we were retaining which we'll start losing out in terms of profitability? Or can there be any other hit in terms of PLI scheme going away as well? .

So Aditya, we have 5 large relationships. Motorola, our relationship through long chair with Oppo and our other relationships. Please be rest assured that the relationships are extremely strategic, deepened anchor. And we expect volume growth and a larger share of business across all these relationships. So please be rest assured on that. Obviously, there is a margin pressure because the PLI going away. A part of it is getting compensated through the enhanced operational efficiency. And the balance part of it is going to start kicking in with a backward integration piece of camera modules and display. So that's the path we are pursuing, which we have shared with you earlier also. But please be rest assured, the anchor relationships are very deep and there is no hit on that.

So what we had earlier kind of discussed that 50 to 70 basis points of margin impact may be there, add to that, maybe optically how the margins may look lower on account of higher realizations, but that should be the complete impact, nothing more than -- that?

That's right, Aditya.

We have captured it. Absolutely. Absolutely.

Perfect. Perfect. And sir, in the last conference call, you had spoken about industrial EMS where you had referred to hiring a senior resource. This time around, you've kind of hinted about exploring different opportunities within Specialty EMS. If you could give us some more details about what are the kind of opportunities within, let's say, aerospace, defense, automotive that you spoke about? How large those opportunities could be? Is it likely to be organic, inorganic? So what's really the road map over there, if there's anything that you can disclose? .

So as we have already taken a very senior resource at the level of President CEO, who is going to build this business for us. We have partnered a very, very large consulting company. 5 micro verticals have been identified. The strategies are being prepared. Already on the table, there are a couple of serious inorganic opportunities across the verticals that I had mentioned in my opening remarks. So we have not budgeted any numbers out of these opportunities as of now in '26-'27. But we feel there's something substantive, at least a couple of them this not happen in the current fiscal.

Okay. And any indication on size, sir, how large [indiscernible]? .

So these are going to be higher-margin businesses. We feel that each would be -- I mean, the combined opportunities which -- I mean are going to be at least scalable to the size of INR 3,000 crores to INR 4,000 crores with a significantly higher operating margins, significantly higher operating margins.

Understood. Understood. Sir, my last question on exports of mobile phones. So of course, with iSmart, we are starting with the feature phones. But is there a road map of moving that relationship to smartphone exports as well. And besides Motorola and iSmart U which are the potential other customers that may get added, let's say it's PLI scheme comes in and incentivizes export opportunities? .

So Aditya, we are -- well, we have deep discussions with our partner and starting with feature phones with iSmartU, the smartphone export is also going to be initiated. Of course, the Motorola relationship for export is going to get a flip after the PLI 2. At present, these are the two relationships they're going to mature into exports. But beyond that, as I had shared in my opening remarks, we have already got 2 orders, 1 from large retail chain in U.S., another 1 from another large tail chain in Europe for Lighting. That has already triggered. And also in our telecom business, wherein we started [indiscernible], microwave radios, we have got an export break. So step by step, we are building.

Sure. And this is part of your indication of doubling up of Lighting revenues or this could be over and above that? SP1.

So at present in our -- to be very candid, in our AOP we've not considered these numbers. This is going to be over and above that.

[Operator Instructions] The next question is from the line of Siddhartha Bera from Nomura.

Sir, first one clarification. When you said that the revenue for the current quarter, you expect a 12% to 15% growth. Is it volume? Or are we talking about the value here? And second is -- sorry? .

Yes, it's the volume growth volume growth.

Siddhartha, both the pricing growth will also happen and the volume growth will also happen.

Understood. And sir, second thing was on the exports, how much was the exports in FY '26? And I mean when you say flat volume growth, that does not include exports, right? So the export of 4 million to 5 million will be over and top of number, which we are planning for the next year?

So that is subject to the policy framework of mobile PLI 2. In the present -- in the last fiscal, the exports was approximately [ INR 5,875 crores ].

Okay. And any color on which markets are we looking for the exports which we plan to do? And in the IT segment also, I think we have seen some increases in the impact from the memory prices? And also do you see a potential risk of ramp up slower being there as well as we go into the next 2 years? .

So the export market for mobile are largely going to be for our anchor customer to U.S. And for other partner companies, it's going to be to the African countries. As far as the impact to the price increase or cost increase due to commodity prices in IT hardware is concerned, we have large deep relationships. In any case, our base was very small. So we are confident of touching this revenue figure of INR 4,000 crores in the current fiscal. And this business, particularly our other partnership within [ ManTech ] is in a significant ramp-up phase.

Got it, sir. Sir, last question is on the...

[indiscernible] You may please rejoin the queue for more questions. We will take our next question from the line of Indrajit Agarwal from CLSA.

I have 2 questions. Post HKC -- sorry, post Vivo, you would have something around 55 to 70-odd million smartphones. Let's say, we hit this run rate by FY '28 -- at some point in FY '28, and that would imply more than 50% market share of the outsourced market in India. How do we see the smartphone volumes growth post that?

So we've seen undoubtedly that there is a significant potential for exports. One is that. The second is we need to work upon getting a larger share of market of existing brand itself. A couple of relationships we see there is still a potential for increasing the share of the wallet. And next is bringing in one more acquisition of a large customer. So definitely, the kind of ramp-up of growth that Dixon has had in its mobile business is not going to be the same level, but yes, the growth will be there. That's what we are pursuing.

So you can gain market share further in the domestic market as well?

We'll definitely strive for it.

Sure. And second, the smartphone concerns that you talk about, the near-term issues, is it more a demand issue because of rise in ASP or availability of memory chips?

So due to the kind of relationships that we have as far as the mobile phones, customers and principles are concerned, we are able to ensure the supply chain is smoothness. So I'm not seeing any shortage due to which the business is getting impacted. But definitely, there is a cost increase. But there's no impact on production.

Sure. So the cost increase is impacting demand, not production.

That's right. That's right.

These are large brand, we have global relationships with the memory suppliers, and they're very deep relationships on to contracts. So I think the supply [indiscernible] is not an issue.

The reason I ask is we have seen Apple and Samsung gained market share in the Indian market where most of the Chinese brands losing. That answers.

Next question is from the line of Keyur Pandya ICICI Prudential Life Insurance Company Limited.

Sir, on the mobile volume side, you mentioned demand [indiscernible] pricing impacting the demand. So when we speak to industry people, so there a point of feel that basically, there is a shortage below $200 kind of phones, and their brands are also prioritizing premium phones because of the shortage. Now in that backdrop, what is giving us confidence of flat volumes? Are we getting higher wallet share? And thereby, we are securing our volumes or as you mentioned, there is no impact on demand. So even with the same wallet share, you are confident of flat volumes? Since this part of commentary versus the industry player was slightly different. So I just wanted to get [indiscernible].

So in our case, what we are pursuing is a larger share of the customer's wallet. How many new product new product wins we are having. And with those project wins with us, we are fairly confident that we'll sustain the volumes.

Yes. And just one more clarification. So as you have highlighted earlier, the profitability is on the per unit basis. So optically on the percentage margin may look lower, but that is it otherwise, for unit, absolute profitability remains intact?

That's right.

Next question is from the line of Bharat Shah from BCS Capital Ideas Limited .

Atulji, I'm just kind of reflecting on the past and kind of drawing the line ahead. For the longish period, we have done wonderfully well in terms of opportunity across many areas, but mobile phone is being on [indiscernible]. And we are not only growing but throughout we maintain final hygiene of the balance sheet and capital efficient [Technical Difficulty] .

I'm sorry to interrupt Mr. Shah. Your voice is fluctuating.

Okay. Is this better now?

Yes.

Yes. So I was saying that over a period of time, we have taken hold of mobile opportunity in a big way and have grown. But somewhere along the line, do you think that strategically, we have allowed ourselves to depend way too much on mobile phone, where it has become a very large part of the business. And therefore, anything unfortunate happening is affecting our overall picture, like it has happened the last year where memory, other things, JV approvals not coming or a combined together than it hurt us. Have we strategically kind of taken eyes of the board?

Bharat bhai, how do we strategize the business? We look at the opportunity pool. We look at the scalability of that opportunity. We look at derisking after the scalability that can we have multiple customers? Is there a possibility of entering the global market? And also, is there a possibility of deepening the manufacturing? Now in EMS services sector, the biggest opportunity pool was and is mobile. And it was aligning with the government policy framework, which I think as a company we have leveraged well. Definitely, there have been some aberrations. There have been some delays, particularly in Vivo government approval and also similar business model, we have tried, and we have tried successfully deploying it across the other product categories. We have done it well in telecom products. We appreciate in '23-'24, we were at INR 700 crores, we have grown to INR 3,600 crores and last year, INR 5,000 crores and this year to INR 8,000. It's absolutely a similar model. We are trying to do the same thing with the IT product where we feel that a similar trajectory of growth will happen. Now with the new the balance sheet strength and also the new foray into components is being replicating through the similar strategy. Now I humbly admit where possibly we have missed out is on the high-margin category of industrial EMS.

Correct.

So yes, that I accept. So yes, possibly, I should have tried it 2 years back. So that's where we, Bharat bhai.

And therefore, if we sum it up all that it is at in various other initiatives which we've taken and probably more will take on the current year way INR 47,000 crores , INR 48,000 crores turnover that we have achieved, what kind of -- because there are too many moving parts. So what kind of turnover one should believe would be there for the current year? And with -- what kind of margin, similar, later or lower.

So Bharat bhai arb, usually, I don't give guidance, but then, yes, let me just share with you. Without the Vivo numbers, this year, we closed almost INR 48,000 crores -- INR 48,800-odd crores. Next year, we are targeting almost INR 56,000 crores without the Vivo numbers and mobile volume being flat. If Vivo comes in, then it's a very major trigger. We feel that without Vivo also, the company will keep growing at almost 15% to 17%.

And with a better, same or lower margin in the current year compared to last year? .

So the margin profile will be slightly under pressure this year because the PLI has gone off. And there is a lag in the margin accretion happening due to component fail, but finally, when the component play is completely deployed, there will be a margin expansion from last year's number by almost 40, 45 bps.

So overall, profit will rise rather than margin overall profit for the company in the current case will rise compared to last year?

Yes, absolute profitability will rise.

Yes, absolute profitability will rise. And once the component play comes in, sir, then there will be a significant margin expansion, which will largely get put out in '27-'28. Camera modules will start -- will start to be -- will happen in H2, where it happens, we are deepening the level of manufacturing, but the display part, which is largely part of the backward indication strategy, will start going out to the [indiscernible].

Not a question, but...

I'm sorry to interrupt.

[indiscernible] just upon, not a question, don't worry. You see, I mean, our capability or capability in the hard core manufacture at efficient cost. And we have done a wonderful, wonderful job in that cash flow, balance sheet, ROC, ROE, everything. I think many things in industry, automobile defense relating, there are multiple opportunities, I think, which once we widen the horizon in opportunity to can widen make. That is all that I see

We are absolutely aligned with you. And just to respond to you, there are significant adjacencies in our existing forays also. For example, the display, one is getting such positive traction to the automotive industry. So there are many, many adjacencies. And also what I had mentioned responding to the question to Aditya, that our foray into industrial EMS, please be rest assured, will be a reality.

Sure. Thank you, Atulji.

Next question is from the line of Achal Lohade from Nuvama Equities.

First question, just a clarification, the 32 million included the exports of 5.5 million, right? .

No, no, no. This is not including exports.

Would you be able to quantify? For FY '26, what is the export number, sir?

No, 33 million is what we did...

No, no '26-'27 number 32 million.

Atul, your question is on '26-'27?

FY '26.

33 million smartphones, and that includes a smartphone -- that includes exports.

And when you're guiding for flat volume, that also in a similar context, total basis or that was just for the domestic?

Both volumes can be over and above this 33 million.

So that is largely domestic.

And what was the quantum for export in FY '26, sir? If you could call out that? .

Around 4 million.

4.5 million or something.

Understood. The second question I had was with respect to PLI. If you could clarify what is the PLI income we booked on a gross and net basis for FY '26? And how much did we receive? And how much is outstanding as of 31st March 2026?

Yes. So the first part of the question is, the total PLI income, which has been booked across the 5 -- the 4 PLI schemes that we are a beneficiary of, the total income is around INR 360-odd crores. And overall, across these 4 PLI, the overall receivable balance will be closer to INR 1,380-odd crores.

And this INR 360 crores...

I'm sorry to interrupt.

Just a clarification. I'm not asking any new questions. Just a clarification. Is this net PLI number, Saurabh bhai, INR 360 crores? I think there is gross, there is pass-through, right? And so there's a net PLI recognized in the...

[indiscernible] costs and INR 960 crores would be net -- the INR 960 crores is the pass on, so difference is the net number.

Next question is from the line of [ Ashutosh Kumar Jha ] from [ Belantis ] Management.

Just 2 questions. One is a bookkeeping question. On the mobile division, can you just break out the hearables, wearables, telecom and tech part of it [indiscernible]? .

We don't split these numbers, please, if you don't...

Understood. No worries. The second was around your earlier comment on the ASP increases that are happening in the industry. As far as Dixon is concerned, can you just clarify the accounting on what happens when the ASP goes up due to memory issues, then how does it impact our revenue and how does it exactly impact our EBITDA? Does EBITDA per unit remains or EBITDA profitability remains?

Yes. So basically, it's the -- so basically, the revenue is a function of the bill of material, the cost of goods sold plus the conversion charge. So if the bill of material or the cost of goods sold up goes up because of the [indiscernible] in the memory prices. So accordingly, the revenue will go up. What our understanding with the customer is that we get an EBITDA per unit depending on the complexity which goes into the smartphone with various models of smartphones. So yes, if the revenue goes up, the margin can optically look over. So we get a per unit conversion charge.

Next question is from the line of Santosh [indiscernible] from Avendus.

First question was on the volume guidance full year. Correct me if I'm wrong, sir, based on the FY '26 volumes of 32 million to 33 million units, our run rate for 4Q '26 implies 5 million units approximately. And if you the guided volume growth of like 12% to 15% percentage sequentially and extrapolate that to second quarter of FY '27 as well, we are arriving at roughly 20 million to 30 million units for first half and 20 million units for second half. So could you explain, is this largely driven by any -- the steep recovery in the second half? Is it driven by any customer ramps or any market gains? Or is it just a broader demand recovery? .

No. First of all, your quarter 4 numbers are closer to 5.6 million. So it's not 5 million. And then we are saying on this, we expect a higher double-digit teen growth in terms of volumes. And we have the numbers in mind, but we don't want to share the specific number. So higher double-digit teen growth I'm talking about. And then on top of it, we are talking pricing growth. So there will be a significant growth in terms of mobile revenues overall on account of both pricing and volumes. Then, of course, you can't just multiply the quarter 1 numbers in before because there's always -- quarter 2 is generally the best quarter for us. And also the exports, which we mentioned, also will start happening from Q2, which we mentioned in our opening remarks. So we feel confident that excluding Vivo, we will be looking at similar volumes. Exports can potentially add some more volumes to it. And then the Vivo volumes as and when the approval comes in, it will have a proportionate impact for the balance part of the year, yes.

And my second question is on the display business. Could you provide some more color on the ramp-up schedule? And how should we think about the margins and the utilization for FY '26 and FY -- sorry, FY '27 and FY '28.

In the Phase I, we are setting up a capacity of 24 million mobile displays annually and 2.4 million of automated and IT product display. The first line we installed is for IT products in automotive display, for which the [indiscernible] is going to start of Q3 of current fiscal and the commercial production is going to start in Q4 of the current fiscal. Mobile display, the trial and the commercial production is going to start in Q4 of the current fiscal. As I had shared, finally, the capacity buildup from mobile over the next 2 years is going to be from 24 million to almost 50 million, 55 million. In the final picture of this business, the revenue target, once we start achieving 80% to 90% of the capacity utilization, the revenue generation is more almost INR 5,500 crores to INR 6,000 crores with a double-digit margin.

Next question is from the line of Keshav Lahoti from HDFC Securities.

Okay. Just as a follow-up on the last question. On the core in ramp-up. So [indiscernible]?

Sorry, the question is not clear. You're not very -- I'm not able to understand. We're not even understand, please. Can you repeat?

Hello?

Please can you repeat the question, Keshav, .

Hello? Am I audible? .

You're audible, but we could not understand your question. Can you repeat it?

Yes. So my question is, once the display business will ramp up, is it fair to assume the margin will be mid-to high teens?

So we feel that it should be double digit margin. Yes, it should be in mid-teens.

So that's -- your understanding is right.

Understood. Got it. So -- but let's say, what about if we end [ FY '26 ], [indiscernible] high teens in next 3 years. That is how we should look at the business, right?

That's right.

Next question is from the line of Rahul Agarwal from IKIGAI.

Just 2 questions. First question, sir, on CapEx. Clearly, we are going ahead with most of the capacity expansion, even fiscal '26, you've landed INR 8,000 crores. So next year, fiscal '27, how do we look at the CapEx budget? And which segments, the largest share? That is question number one. And question two, just from a top-down perspective for Dixon both from a cost inflation perspective and the ForEx rate, which is INR-U.S. dollars, how does it impact Dixon, positive or negative? Is there a time lag between what we should actually anticipate once -- it's a 100% pass-through business is what I understand. Could you just put some thoughts around these 2 points would really help to understand further.

So Rahul, on the CapEx side, we feel that the CapEx number, well, a lot of CapEx in our existing business has already been front0ended. The CapEx allocation is largely going to be on 3 things: one, our display capacity; second, our expansion of the IT business; and third is expansion of a camera module capacity and deepening of manufacturing. As far as the absolute number is concerned, it will be in the similar range, and the balance sheet and the cash accruals are ready quite to support this expansion. As far as the commodity price increase and the currency fluctuation is concerned, and our EMS business is an absolute pass-through. So there is no currency risk and there's no time lag. As far as our OEM business is concerned, which is the business of our appliances, that is washing machine refrigerator, edit television and lighting. That's where in we do a product at and we have to pass on that cost increase to the customer. Yes, we are pushing that cost increase to the customer. Sometimes there can be a lag of a couple of months. But largely, we are able to pass it on to the customer. So that's where it is

Next question is from the line of [ Samir Mehta ] from [indiscernible].

One question from my side. In terms of the industrial EMS opportunity, is it fair to assume that in terms of the opportunity size, it is may be as big or bigger than the IT hardware? And also from a margin perspective, it will be better margins with less dependency on government PLI, et cetera? Would that be a fair?

You're absolutely right.

So in terms of revenues, [indiscernible] we can be a bigger opportunity. but margin profiles decently in an EMS, high-margin EMS business, specialty in this business will be much, much higher. Definitely, as there is no PLI there in that particular segment.

Sure. And my second, just a bookkeeping question on the INR 360 crore of net PLI what you have booked across 5 entities. Would it be possible to give just for the mobile and EMS division.

Yes. So that will be -- that is closer to almost INR 250-odd crores.

INR 250-odd crores. And last question now with various things on the plate, is it fair to assume that our earlier thoughts of putting up a display fab unit is much in the less priority versus some of the other businesses, what we are talking about? .

Yes, that's right.

That's right.

Next question is from the line of Pulkit Patni from Goldman Sachs.

I have a couple of them. One is you spoke about server opportunities that looking at data center servers. Could you highlight like what stage of discussion are we in? What is the kind of work that we could get over the next, say, 12, 18 months here? Or is it very, very initial stage?

Well we are mapping this opportunity and dialogue with our partners already started. We feel the government policy framework for local manufacturing of servers for serving the Indian data center requirement is going to get at a significant lift. So the controls have been worked out. Exact numbers and opportunity in terms of numbers, I'm not in a position to share. I think it's early for that.

Sure, sir. This is clear. Sir, my second question is I'm referring to notes to accounts [ 11 ], which talks about INR 1,100-odd crores, which is receivable from PLI and INR 730-odd crores that is payable. Could you highlight the reason why this is like mentioned in the note, is it something where governments not given approval? Like if you could just highlight what's the status there in terms of our receivable and our payout to the customer?

Yes. So basically, as part of the PLI scheme, there was a provision under the guideline that -- and there was a budget allocated to it for domestic companies, 5 domestic companies and 5 foreign companies. Now -- and there was a vision of the guideline that if some company underperforms domestic companies underperform, there, to the extent that there is an over performance by a company in this case of [indiscernible], the incentive will be given to the extent of underperformance by other companies. So we are in given all the incentives by the government until the revenues which is ceiling, which is defined per applicant or per company. Now the overflow money is still pending, which we are in discussions with the government. And so it will be -- in similar cases, would be for foreign companies as with the vendors of large global brands. So that thing is being pursued by the government. So the auditors field felt right that there should be [indiscernible] it, and that's the reason it has been mentioned.

Thank you. Ladies and gentlemen, we will take that as a last question for today. I would now like to hand the conference back to the management for closing comments.

So thank you so much, everyone, for being with us today evening, and thanks a lot. Have a great day.

Thank you so much. Thank you.

Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.