Fiem Industries Ltd Quarterly Results Q1 FY 26 stock analysis

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Sector Outlook: Neutral

Improving LED penetration and better mix drives robust performance

Fiem Industries delivered a strong Q1FY26 performance, with revenue rising 14.1% YoY (up 3.0% QoQ) to Rs. 6,589 million, supported by healthy demand traction from key OEMs such as TVS, Royal Enfield, and Yamaha, along with higher content per vehicle and growing LED penetration, which now forms ~64% of total sales. The growth was also aided by premiumisation, particularly from newer model launches like TVS Jupiter and Apache, as well as strong export traction for Yamaha. Gross profit grew 16.5% YoY (up 5.1% QoQ) to Rs. 2,572 million, with margins expanding 81 bps YoY and 78 bps QoQ to 39.0%, benefiting from an improved LED mix and richer product portfolio, while cost pass-through arrangements with OEMs ensured stability in raw material margins. EBITDA increased 13.9% YoY (up 4.8% QoQ) to Rs. 895 million, with margins largely stable on an annual basis at 13.6% and improving sequentially by 23 bps, despite being weighed down by the higher development and sales-related expenses linked to new projects. While Fiem’s operating performance was strong, the reported PAT came in at Rs. 575 million. This marked a significant 17.7% rise YoY, but a minor 2.3% decrease compared to the previous quarter. The corresponding PAT margin was 8.7% (up 27 bps YoY / down 48 bps QoQ).

Valuation and Outlook

Fiem’s Q1FY26 performance continues to mark its ability to consistently grow ahead of the underlying 2W industry, aided by rising LED adoption, premiumisation, and content gains across key OEM partners. The company delivered margin stability, underlining the strength of its cost pass-through mechanisms and richer product mix. Importantly, the management highlighted that LED contribution has already reached ~64% of sales and is expected to scale to 75–80% over the next two years, which should structurally enhance profitability. Looking ahead, Fiem remains well-positioned to sustain its growth trajectory, supported by continued LED adoption, content gains from new model launches, and deeper penetration with leading OEMs. The company’s entry into the four-wheeler segment through orders from Force Motors and Mahindra, coupled with its ongoing investments in SMT lines and the upcoming EMC/EMI validation lab and growing RFQ pipeline, provides visibility on medium-term diversification and technological leadership. With management reiterating its 15-20% annual sales growth guidance, a good festive demand outlook, and a stable margin profile aided by cost pass-through mechanisms, we expect Fiem to deliver steady earnings growth, supported by both operating leverage and structural improvements in its product mix.

Key concall Highlights

The company maintained its 15–20% organic sales growth guidance and a CapEx plan of ₹200 crores over three years, with ₹75–100 crores planned this year for a new facility, SMT lines, and other investments. LED lighting, now 64% of sales, is expected to rise to 75–80% in the next two years, while the non-LED portfolio remains stable at ₹170–180 crores. Strategic wins include three new product development orders from Force Motors and the installation of India’s first automotive lighting EMC/EMI lab. Growth with HMSI remains in line with its production, Hero projects are progressing though Harley-linked ones are slow, and Hero’s 125cc all-LED launch is upcoming. TVS added higher content per vehicle with Jupiter and Apache launches. RFQs worth ₹700 crores are under technical review, with Force as the newest four-wheeler customer. The company foresees minimal impact from rare earth metal supply risks due to limited EV exposure.