INSUBCONTINENT EXCLUSIVE:
Large corporates have already laid out plans to set up fab units.In December 2021, the Indian government gave a huge boost to semiconductor
and display manufacturing
It allocated over Rs 76,000 crore to the sector in the PLI scheme.The aim here is to increase semiconductor and display manufacturing to
This demand is now met by imports.Large corporates including Tata group and Vedanta group have already laid out plans to set up fab
units.The Vedanta group has planned investments of $15 billion over the next 5-10 years to make displays and semiconductor chips in
India.Global companies too, have shown lot of interest
And why wouldn't they? After all, display fab units will be offered fiscal support of up to 50% of project cost.When the PLI scheme was
announced, we were quick to identify the huge opportunity here
We wrote to you about the stocks in the semiconductor space.In this article, we will look at two display industry stocks which should be in
your watchlist for 2022.#1 Dixon TechnologiesDixon Technologies is one of the largest design-focused and solutions company in India
It's engaged in manufacturing consumer electronics.The company's product portfolio includes most consumer electronics we use daily
manufacturer of LED TVs in India.It produces TVs for global and domestic brands like Samsung, Panasonic, Xiaomi, TCL, OnePlus, and many more
watchlist.Display manufacturing is very complex and technology-intensive
The problems are huge capital investment, high risk, and rapid changes in technology.Despite being in a capital-intensive sector, Dixon has
maintained a footprint, across verticals, with little debt on its books.Over the years, the company has augmented its manufacturing capacity
It has also acquired a good control over costs.Dixon is now among the largest and most cost-efficient electronics companies in India.Its
focus on new verticals has supported growth
Around two years back, it ventured into manufacturing of set-top boxes and medical electronics.There's a growing demand for display
screens in India for manufacturing LEDs, desktops, smart phones, etc
Students now need laptops to attend lectures from home in a post pandemic world.Due to the increased demand, global manufacturers are tying
up with local manufacturers like Dixon who have a good execution track record
Taiwanese PC maker, Acer, has partnered Dixon to make laptops in India
For this, a manufacturing unit was augmented last year so as to produce up to 500,000 laptops annually.This just shows the government's
The PLI is like an added boost.Dixon's subsidiary Padget Technologies has already received permission from the government under PLI scheme
for manufacturing mobile phones.Domestic mobile phone production is set to grow in the next 5-6 years and Dixon will be one of the main
beneficiaries.In a recent interview, the company's MD said that Dixon has a capital expenditure (capex) of around Rs 450 crore for fiscal
2022.He also said that the company's revenues are expected to see a sharp rise from Rs 6,400 crore to Rs 11,000-11,500 crore in fiscal
2022.Since listing in September 2017, the stock is up a massive 645%.Lately, Dixon's stock has come under pressure owing to the shortage
in global supply chain of semiconductors, which is an important component of electronics products.The fall can also be attributed to a weak
Last month, Dixon posted 9% sequential growth in revenue while net profit declined 25%.To know more, check out Dixon Technologies' latest
quarterly results.#2 PG ElectroplastJust like Dixon, PG Electroplast is into manufacturing LED TVs, mobile components, washing machines, air
The group is one of the leading contract manufacturers/vendors for ACs, washing machines and other plastic moulded components for white
goods.It receives consistent orders from popular brands including Voltas, LG India, Whirlpool, Reliance Digital, Onida, Godrej, and
Acer.While the company derives less than 10% of its revenues from the electronics segment, its sound financials make it worth putting on
your watchlist.In 1995, PG Electroplast started manufacturing complete TV sets at its facility in Noida
However, soon after the company entered this space, it faced immense competition by South Korean and Japanese TV brands in India
Even large brands like Onida and Videocon could not survive.After a long halt, it has re-entered the television manufacturing business,
applied for the PLI scheme for white goods including components for ACs and LEDs.In July-September 2021 quarter last year, the company
started manufacturing/assembling of LED TV for two of its clients at the Greater Noida facility
It has tied-up with a Chinese company for tech know how and designing of LED TVs
The facility has an annual installed capacity of 500,000 units of televisions with screen sizes up to 70 inches.The company's management
is of the view that production will ramp up from January-March 2022 quarter onwards.In 2021, the company saw a sharp spike in its net profit
as all its verticals did well
2021 was also the year in which PG recorded highest-ever revenue, operating profit, and net profit
This despite posting quarterly sales losses in the first two quarters due to the lockdown and its after effects.The only big concern is the
company's debt which has increased over the years.Those who had invested in the company a year ago would be sitting on heavy gains of
200%.To know more about the company, check out the financial factsheet of PG Electroplast.In conclusionThe government's increased focus to
be self-reliant has opened a huge opportunity for big as well as small players
Investments from companies seeking to benefit from the scheme may begin soon
The government is expecting investments worth Rs 1.7 lakh crore.Plans for notifying the scheme in a few weeks, fast tracking approvals, and
handholding companies are already in motion as they set up manufacturing units in India.The benefits of PLI scheme for semiconductor and
display industry companies isn't limited to them
for the entire electronics space.Disclaimer: This article is for information purposes only
been edited by TheIndianSubcontinent staff and is auto-generated from a syndicated feed.)
