Fiem Industries Ltd – Powering India’s Automotive Lighting TransformationInsights

Fiem Industries Ltd – Mild up the world

Fiem Industries Restricted is a Tier-1 automotive elements producer headquartered in New Delhi, with operations anchored in India’s two-wheeler ecosystem and an increasing presence in passenger automobiles. Included in 1989, the corporate is presently amongst India’s main producers of automotive lighting and signalling tools, complemented by rear-view mirrors, plastic moulded elements, sheet steel elements and choose security and digital elements. Through the years, Fiem has steadily migrated its portfolio in the direction of LEDs, with LED lighting now contributing to a majority of whole automotive lighting revenues. Manufacturing is carried out by means of 9 strategically situated vegetation throughout key automotive hubs throughout India, supported by R&D and design centres in India, Italy and Japan.

Merchandise and Companies

• Automotive LED Lighting – LED headlamps, rear lights, flip indicators, DRLs and signalling models.
• Automotive Lighting (Typical) – Halogen headlamps, rear lights and indicator lamps.
• Rear View Mirrors – Built-in mirror techniques for two-wheelers.
• Plastic Moulded Elements – Physique panels equivalent to fenders, ground panels and facet covers.
• Others – Sheet-metal elements, canisters, sensors and diverse engineered elements.

Subsidiaries: As of FY25, the corporate has 2 subsidiaries and a pair of joint ventures.

Funding Rationale

• Enlargement into new platforms and automobile segments – The corporate is extending its core competencies in LED lighting into higher-value automobile platforms throughout each home and export markets. In FY25, it started provides to Mahindra & Mahindra for his or her passenger automobiles, beginning with LED license plate lamps, and has since secured follow-up orders for high-mounted cease lamps and fog/reflector lamps on the Bolero and Scorpio. This marks a big diversification past its conventional two-wheeler base. Inside two-wheelers, the corporate started provides of projector headlamps for the refreshed Hero Glamour X 125, in addition to winker lamps for the Glamour and Xtreme fashions. It additionally commenced LED headlamp and taillamp provides for Yamaha’s XSR 155 and its first electrical mannequin in India. This broadening buyer base throughout 2W EVs, ICE scooters, and passenger vehicles is predicted to boost income visibility and enhance per-vehicle realisation over the medium time period.

• Sturdy Product Portfolio offering a robust proxy to Auto momentum – FIEM’s in depth product protection together with headlamps, taillamps, indicators, mirrors, plastic and sheet-metal elements, create a income stream that tightly tracks the efficiency of India’s automotive business, which is presently in a robust upcycle. In Q2FY26, 2-wheelers contributed ~97.7% of income, and FIEM has deep relationships with all main OEMs together with TVS, Honda, Yamaha, Suzuki and Royal Enfield, forming over 85% of its gross sales combine. The shift towards premium and LED-equipped fashions continues to profit FIEM, a key driver of worth progress and margin growth. Supplementing this are rising EV engagements and early traction in passenger automobiles, cementing FIEM as a broad-based play on India’s ongoing mobility demand.

• Q2FY26 – Throughout the quarter, the corporate reported income of Rs.711.4 crore, up 17.1% YoY in comparison with Rs.607.5 crore in Q2FY25. EBITDA rose to Rs.99.1 crore, a 23.5% improve from Rs.80.3 crore within the corresponding quarter, with EBITDA margin increasing from 13.2% to 13.9%. Web revenue stood at Rs.63.8 crore, rising 28.0% YoY from Rs.49.8 crore in Q2FY25. LED contribution reached 63.9% of whole lighting revenues, reflecting the corporate’s continued shift in the direction of higher-value, technology-driven merchandise. The margin growth was supported by a richer product combine and enhancing scale advantages.

• FY25 – Throughout FY25, the corporate generated income of Rs.2,405 crore, a rise of 19% in comparison with the FY24 income. EBITDA is at Rs.322 crore, up by 20% YoY. The corporate reported a internet revenue of Rs.205 crore, a rise of 24% YoY.

• Monetary Efficiency – The three-year income and internet revenue CAGR stands at 16% and 29% respectively between FY23-25. The corporate has a debt-to-equity ratio of 0.06. The three-year common ROE and ROCE are round 20% and 27% for FY23-25 interval.

Trade

India’s auto elements sector is increasing quickly, supported by a rising workforce, increased disposable incomes, and a realignment of worldwide provide chains. The business reached US$ 78.74 billion in FY25, rising at a 14% CAGR over FY20–25. It’s anticipated to develop additional with home OEM part gross sales rising to US$ 89 billion by 2030. The federal government’s push for manufacturing self-reliance and decrease import dependence is strengthening the place of home suppliers. India is more and more serving as a sourcing base for main international OEMs, benefitting from its geographic closeness to key automotive markets throughout Asia and Europe. Rising earnings ranges, continued infrastructure growth, and focused coverage help, particularly for electrical mobility are additional accelerating sector progress. As electrification and hybrid adoption rise worldwide, Indian part makers are well-positioned to seize rising demand.

Development Drivers

• 100% FDI permitted underneath the automated route for auto elements manufacturing.
• Decrease private tax burden in Union Finances 2025 – 26 anticipated to spice up discretionary spending by the increasing middle-class.
• Rs.7,400 crore allocation for the EV ecosystem in Finances 2025 – 26, representing a 74% YoY improve.

Peer Evaluation

Rivals: Lumax Industries Ltd and Varroc Engineering Ltd, and so forth.

In comparison with its friends, the corporate demonstrates disciplined capital allocation and powerful general monetary efficiency.

Outlook

FIEM is actively constructing capability to help the sturdy demand outlook and guarantee it stays forward of OEM quantity progress. In H1 FY26, the corporate invested Rs.37.81 crore in capex, with one other Rs.50–60 crore deliberate in H2, taking FY26 capex to ~Rs.100 crore, absolutely aligned with future scale-up necessities. Administration highlighted capability utilization transferring towards the 80% vary, signalling sturdy demand outlook. The corporate additionally sees visibility from its 100+ ongoing growth initiatives, that are estimated to generate Rs.1,000 – 1,200 crore of income over the subsequent few years. With a continued concentrate on lighting expertise upgrades and RFQ conversion momentum in each 2W and 4W segments, the corporate is properly positioned to maintain its steering of 15–20% annual income progress.

Valuation

Fiem’s sturdy product portfolio is properly positioned to profit from the upcycle in auto demand, backed by strategic capability expansions and deep OEM relationships. We suggest a BUY score within the inventory with the goal value (TP) of Rs.2,718, 21x FY27E EPS. We additionally encourage sustaining a stop-loss at 20% from the entry value to handle potential draw back threat successfully.

SWOT Evaluation

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