Last conference call, you spoke about industrial EMS. This time around, you have hinted about exploring different opportunities within specialty EMS. Could you give more details about opportunities within aerospace, defense, automotive that you spoke about, how large those opportunities could be? Organic vs inorganic?
We have already taken a very senior resource at the level of President and CEO, who is going to build this business for us. We have partnered a very large consulting company. Five micro verticals have been identified. Their 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. We have not budgeted any numbers out of these opportunities as of now in '26, '27, but we feel that something substantive, at least a couple of them is going to happen in the current fiscal. These are going to be higher-margin businesses. The combined opportunities which come in are going to be at least scalable to the size of INR3,000 crores to INR4,000 crores with a significantly higher operating margins.
On the mobile and EMS division, can you break out the Hearables, Wearables, Telecom and Q Tech part of it?
We don't split these numbers, please, if you don't mind.
On volume guidance for the full year - based on FY26 volumes of 32-33 million units, 4Q26 implies 5 million units approximately. If we factor in 12-15% sequential growth, we arrive at 12-13 million units for H1 and 20 million units for H2. Is this driven by steep recovery in H2, customer ramps, market share gains, or broader demand recovery?
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 that numbers in mind, but we don't want to share the specific number. So high double-digit teen growth I'm talking about. And then on top of it, we are talking about a 12% to 15% pricing growth. So there will be a significant growth in terms of mobile revenues overall on account of both pricing and volume. Quarter 1 numbers cannot just be multiplied into 4 because quarter 2 generally is the best quarter for us. The exports start happening from Q2. We feel confident that excluding Vivo, we will be looking at a similar volumes. Exports can potentially add some more volumes to it. And then the Vivo volumes as and when the approval comes in, will have a proportionate impact for the balance part of the year.
On the server opportunity for data centers - what stage of discussion are we in? What is the kind of work we could get over next 12-18 months here? Or is it very initial stage?
We are mapping this opportunity and dialogue with our partner has already started. We feel that the government policy framework for local manufacturing of servers for serving the Indian Data Center requirement is going to get at a significant flip. So the contours are being 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.
On the mobile side, what is the FY27 ramp-up on volumes? What are the other areas of growth this year, including IT hardware (last call you spoke about INR3,500-4,000 crores being possible in FY27), display JV, camera module? Also any thoughts on the Vivo JV and whether your volume guidance includes Vivo?
We have closed at almost 32-odd million in the current fiscal. We feel that the overall volumes without Vivo is going to be almost similar. 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. On an annualized basis, 67% of what Vivo said and last year Vivo sold almost 35 million units, another 20 million, 22 million units can be added on an annualized basis. On the feature phone side, exports of feature phones under our subsidiary Ismartu to Africa will take us up to almost 50 million units. With PLI 2 (focus on global markets), beyond Vivo and Ismartu, another 4 million to 5 million units can be added. IT products revenue this fiscal is going to be more than INR4,000 crores. Camera module Q Tech expansion: present 70 million to 80 million to almost 190 million units; last year revenue INR1,700 crores, targeting INR2,500 crores. Display: building is ready, machinery getting installed, trials Q3, commercial production Q4; not putting numbers in current fiscal. Telecom grown from INR3,600 crores to INR5,000 crores in current fiscal, targeting INR7,500-8,000 crores in '26-'27. Lighting INR800-850 crores this year, target INR1,700 crores (2x via Signify JV). Inventec JV starts generating numbers Q3, SSD module line further generates numbers.
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 higher than the volume growth?
That's right. We expect that the revenue growth should be at least 12% to 15% higher, if not more. Once the Vivo thing comes into the system, then we are hoping that the selling prices would be better than our existing weighted average selling price of the current portfolio. So the margins may optically can be lower, but the revenue-wise, there will be upside on that.
On the PLI scheme coming to an end on the mobile phone side - how are the conversations with customers? Is it only the element that we were retaining, which we'll start losing in profitability, or can there be any other hit in terms of PLI scheme going away as well?
We have 5 large relationships - Motorola, our relationship through Longcheer with Oppo and our other relationships. The relationships are extremely strategic, deepened anchor. We expect volume growth and a larger share of business across all these relationships. Obviously, there is a margin pressure because of 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 the backward integration piece of camera modules and display.
Last call you'd kind of discussed 50 to 70 basis points of margin impact may be there. Add to that, maybe optically how margins may look lower on account of higher realizations, but that should be the complete impact?
That's right, Aditya. You have captured it absolutely.
On exports of mobile phones - with Ismartu we are starting with feature phones. Is there a road map of moving that relationship to smartphone exports? And besides Motorola and Ismartu, which are the potential other customers that may get added if PLI 2 scheme comes in?
We have had deep discussions with our partner and starting with feature phones with Ismartu, the smartphone exports is also going to be initiated. The Motorola relationship for export is going to get a flip after the PLI 2. At present, these are the two relationships which are going to mature into exports. Beyond that, we have already got two orders, one from large retail chain in U.S., another one from another large retail chain in Europe for lighting. That has already triggered. And also in our telecom business, wherein we have started manufacturing radios, microwave radios, we have got an export break. In our AOP, we have not considered these numbers. This is going to be over and above that.
When you said the revenue for the current quarter, you expect a 12-15% growth, is it volume or value? And how much was the exports in FY26? When you say flat volume growth, that does not include exports? Will export of 4-5 million be over and on top of next year's planning?
Yes, it's the volume growth you're talking about. Both the pricing growth will also happen and the volume growth will also happen. That is subject to the policy framework of mobile PLI 2. In the last fiscal, the exports was approximately INR5,375 crores. The export market for mobile are largely going to be for our anchor customer to U.S. And for the other partner company, it's going to be to the African countries.
Any color on markets for exports and in the IT segment, with increases in memory prices impact, do you see a potential risk of ramp-up slower being there as well as we go into next few years?
As far as the impact of the price increase or cost increase due to commodity prices in IT hardware is concerned, we have large deep relationship. In any case, our base was very small. So we are confident of touching this revenue figure of INR4,000 crores in the current fiscal. And this business, particularly our other partnership with Inventec is in a significant ramp-up phase.
Post Vivo, you would have something around 55-57 million smartphone. If we hit this run rate by FY28, that would imply more than 50% market share of the outsourced market in India. How do we see smartphone volumes growth post that?
There is a significant potential for exports. We need to work upon getting a larger share of market of existing brand itself. A couple of relationships, we feel there is still a potential for increasing the share of the wallet. Next is bringing in one more acquisition of a large customer. The kind of ramp-up 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.
The smartphone concerns you talked about, the near-term issues, is it more a demand issue because of rise in ASP or availability of memory chips?
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 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 is no impact on production. These are large brands, they have global relationships with the memory suppliers and they're very deep relationships, long-contracts. So supply availability is not an issue. So the cost increase is impacting demand, not production.
On the mobile volume side, when we speak to industry people, their point of view is that there is a shortage below $200 kind of phones and brands are prioritizing premium phones because of the shortage. In that backdrop, what is giving us confidence of flat volumes? Are we getting higher wallet share?
In our case, what we are pursuing is a larger share of the customers' wallet that how many new project wins we are having. And with those project wins with us, we are fairly confident that we'll sustain the volumes.
As you have highlighted earlier, profitability is on the per unit basis. So optically percentage margin may look lower, but otherwise per unit absolute profit remains intact? X of PLI?
That's right. That's right.
Reflecting on the past, we've grown well in mobile while maintaining balance sheet hygiene and capital efficiency. But somewhere along the line, do you think strategically we've allowed ourselves to depend way too much on mobile phone where it has become very large part of the business and therefore, anything unfortunate happening is affecting our overall picture? Have we strategically taken eyes off the ball?
How do we strategize the business? We look at the opportunity pool, scalability, derisking by multiple customers, possibility of entering global markets, deepening manufacturing. 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. Now definitely, there have been some aberrations. There have been some delays, particularly in Vivo government approval. We have tried similar business model successfully across the other product categories - in telecom from INR700 crores in '23-'24 to INR3,600 crores, last year INR5,000 crores, this year INR8,000 crores. Same with IT product. With balance sheet strength and new foray into components being replicated. Where possibly we have missed out is on the high-margin category of industrial EMS. So yes, possibly, I should have tried it 2 years back.
Summing it all up - from current year INR47-48,000 crores turnover, what kind of turnover should we believe for the current year? And with what kind of margin similar, better or lower?
Usually, I don't give guidance, but let me just share with you. Without the Vivo numbers, this year, we closed at almost INR48,000 crores - INR48,800-odd crores. Next year, we are targeting almost INR56,000 crores without the Vivo numbers, and mobile volume being flat. If Vivo comes in, then it's a very major trigger. Without the Vivo also, the company will keep growing at almost 15% to 17%. 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 foray. But finally, when the component play is completely deployed, there will be a margin expansion from last year's number by almost 40 bps, 50 bps. Yes, absolute profitability will rise.
Clarification - the 32 million included the exports of 5.5 million, right? Would you be able to quantify for FY26, what is the export number? And when guiding flat volume, that's total basis or just domestic?
33 million smartphones, and that includes a smartphone - that includes export. Export volumes can be over and above this 33 million. That is largely domestic. Around 4 million / 4.5 million was exports in FY26.
With respect to PLI - could you clarify what is the PLI income we booked on a gross and net basis for FY26? How much did we receive? How much is outstanding as of 31st March 2026?
The total PLI income which has been booked across the 4 PLI schemes that we are a beneficiary of is around INR360-odd crores. And overall across these 4 PLI, the overall receivable balance will be closer to INR1,380-odd crores. INR960 crores would be the net. INR960 crores is the pass on, so difference is the net number.
On ASP increases happening in the industry - can you 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 impact our EBITDA? Does EBITDA per unit remain same or EBITDA profitability remains same?
Basically, it's the bill of material plus our conversion charge. So if the bill of material, the cost of goods sold goes up because of increase in the memory prices, 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 will optically look lower. So we get a per unit conversion charge.
On the display business - could you provide more color on the ramp-up schedule? And how should we think about margins and utilization for FY27 and FY28?
In the Phase 1, we are setting up a capacity of 24 million mobile displays annually and 2.4 million of automotive and IT product display. The first line we installed is for IT products and automotive display for which the trial is going to start in 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've shared, finally, the capacity buildup for 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 going to be almost INR5,500 crores to INR6,000 crores with a double-digit margin.
Once the display business will ramp up, is it fair to assume the margin will be mid- to high teens? What about FY28 being a full year of production - initially lower margins ramping up to mid-high teens in next 2 years?
We feel that it should be double-digit margin. Yes, it should be in mid-teens. That's right - initially it would start with lower and possibly will ramp up to mid- to high teens in the next 2 years.
On capex - fiscal '26 ended at INR1,000 crores. How do we look at the capex budget for FY27 and which segments take largest share? Also top-down for Dixon, from input cost inflation and forex (INR-USD) perspective, how does it impact Dixon - positive or negative? Time lag, 100% pass-through?
The capex allocation is largely going to be on three things. One, our display capacity. Second, our expansion of the IT business, and third is expansion of our camera module capacity and deepening of manufacturing. As far as the absolute number is concerned, it will be in the similar range. The balance sheet and the cash accruals are adequate to support this expansion. Our EMS business is an absolute pass-through. So there is no currency risk and there is no time lag. Our ODM business (washing machine, refrigerator, LED television and lighting) is product sale, and we have to pass on cost increase to customer. Sometimes there can be a lag of a couple of months. But largely, we are able to pass it on to the customer.
On the industrial EMS opportunity - is it fair to assume the opportunity size is maybe as big or bigger than IT hardware? And from margin perspective, better margins with less dependency on government PLIs? Of the INR360 crores of net PLI booked across 5 entities, would it be possible to give just for the mobile and EMS division? And is the earlier thought of putting up a display fab unit much less priority versus other businesses?
In terms of revenues, IT hardware can be a bigger opportunity. But margin profile definitely in a high-margin EMS business, specialty EMS business will be much, much higher. And definitely, yes, there is no PLI there in that particular segment. The net PLI for mobile and EMS division is closer to almost INR250-odd crores. Yes, that's right - putting up a display fab unit is much less priority versus some of the other businesses we are talking about.
Referring to notes to accounts 11 - which talks about INR1100-odd crores receivable from PLI and INR730-odd crores payable. Could you highlight why this is mentioned in the note? Is it something where government has not given approval? What's the status of receivable and payout to customer?
Basically, as part of the PLI scheme, there was a provision that for budget allocated to it for five domestic companies and five foreign companies. There was a provision under the guideline that if some company underperforms, those five domestic companies underperform - to the extent that there is an overperformance by a company (in this case Dixon), the incentive will be given to the extent of underperformance by other companies. We have been given all the incentives by the government till the ceiling revenues per applicant. Now the overflow money is still pending, which we are in discussions with the government. Similar cases would be there for foreign companies as well, the vendors of large global brands. So that thing is being pursued with the government. The auditors felt right that there should be a note to it.