Shares of Dixon Technologies rose nearly 4 percent in early trade on Friday after the company received the Central government's approval for its proposed joint venture with Vivo Mobile India under Press Note 3 regulations. The regulatory clearance removes a major overhang for the transaction and allows both companies to move ahead with operationalising the partnership.

Following the approval, Dixon Technologies and Vivo Mobile India signed definitive agreements to establish the joint venture. Dixon will hold a 51 percent stake in the new entity, while Vivo Mobile India will own the remaining 49 percent.

The joint venture will undertake a portion of Vivo's smartphone manufacturing operations in India and will also be authorised to manufacture electronic products for other brands. Upon completion of the transaction, the venture will acquire certain manufacturing assets and enter into manufacturing and packaging agreements with Vivo to execute part of its original equipment manufacturing business.

The partnership was initially announced in December 2024 through a non-binding term sheet. With regulatory approval now secured and definitive agreements signed, the companies can proceed with completing the remaining conditions before commencing operations.

Brokerages maintained a positive outlook on Dixon Technologies following the development. JPMorgan retained its Overweight rating with a target price of Rs 16,700, stating that the approval removes a significant uncertainty and paves the way for the joint venture to begin operations during the third quarter of FY27. The brokerage expects approximately 67 percent of Vivo's India smartphone volumes to shift to Dixon through the partnership, potentially contributing around Rs 30,000 crore in additional revenue. It also increased its FY27 to FY29 revenue estimates by 24 percent to 39 percent and earnings estimates by 13 percent to 18 percent.

Nomura also reaffirmed its Buy rating on the stock with a target price of Rs 13,813. The brokerage expects the venture to strengthen Dixon's mobile manufacturing business over the medium term, with total mobile phone production potentially reaching nearly 60 million units in the coming years. It also estimates Dixon's domestic mobile manufacturing market share could rise to around 35 percent to 38 percent, while EBITDA margins may improve through higher operating leverage and increased backward integration. Nomura further noted that any future production-linked incentive scheme for mobile exports could provide additional growth opportunities.

The regulatory approval marks a significant milestone for Dixon Technologies as it expands its electronics manufacturing capabilities and strengthens its position in India's rapidly growing smartphone manufacturing ecosystem.