Dixon Technologies inks major deal with HP to manufacture millions of pcs under new government scheme

Dixon Technologies, a key player in India’s IT hardware manufacturing sector, has signed a Memorandum of Understanding (MoU) with HP India Sales Private Ltd. through its subsidiary, Padget Electronics Private Ltd. This agreement is part of the Indian government’s Production Linked Incentive (PLI) Scheme 2.0 for IT hardware. Under the deal, Padget Electronics will manufacture notebooks, desktops, and all-in-one PCs for HP India, bolstering Dixon’s presence in the IT hardware sector.

The deal will involve establishing a new manufacturing facility in Oragadam, Chennai, which will span 300,000 square feet. This facility is expected to produce up to 2 million units annually, including laptops, desktops, and all-in-one PCs, starting from January next year. The partnership with HP India is seen as a strategic move by Dixon to leverage the PLI 2.0 scheme, which aims to boost local manufacturing and reduce dependence on imports.

Dixon’s partnership with HP comes after similar agreements with other global brands like Lenovo and Acer, making this the company’s third major deal in the IT hardware sector. The PLI 2.0 scheme offers significant incentives for companies to expand their production capabilities in India, aligning with the “Make in India” initiative aimed at strengthening the country’s manufacturing ecosystem.

HP India, which holds a substantial market share of 28-30% in the Indian desktop and notebook market, expects this collaboration to enhance its local production capacity and reduce its import dependency. The new facility is anticipated to generate around 1,500 direct jobs and will play a significant role in enhancing HP’s supply chain resilience in India.

Dixon Technologies has set an ambitious revenue target of ₹30-35 billion for the fiscal year 2025 (F26) from its IT hardware operations, with a long-term goal of achieving a cumulative revenue of ₹480 billion over the next six years. This move is expected to significantly contribute to Dixon’s revenue growth, aligning with its strategy to become a leading player in India’s IT hardware sector.

Market analysts have reacted positively to this development. Morgan Stanley has maintained an “Equal Weight” rating on Dixon Technologies, setting a target price of ₹8,696 per share. The brokerage firm highlights the significant revenue potential this deal brings, contributing to Dixon’s growth trajectory in the IT hardware market.

Overall, the partnership between Dixon Technologies and HP India is poised to strengthen Dixon’s footprint in the IT hardware industry and boost HP’s local manufacturing capabilities under the PLI 2.0 scheme, which aims to reduce import dependency and create jobs in India’s burgeoning tech sector.