Recommendation from Automobile & Ancillaries Sector

Ratin Biswass / 24 Jul 2025/ Categories: Choice Scrip, Choice Scrip, DSIJ_Magazine_Web, DSIJMagazine_App, Recommendations

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year.

This column gives you scrip chosen by the research team during the fortnight that is fundamentally strong and expected to give good capital appreciation over a time period of 1 year. [EasyDNNnews:PaidContentStart]

FIEM INDUSTRIES LTD : LEADING THE CHARGE IN AUTOMOTIVE LED LIGHTING

HERE IS WHY
✓ PAT crosses ₹200 crore milestone for the first time
✓ Strong base of 50 OEMs
✓ Gen-next tech focus backed by strong R&D

I ndia has become the fastestgrowing major economy in the world in recent years, which has led to significant demand for automobiles, including auto components. India's automotive lighting market size reached USD 1.8 billion in 2024. Looking forward, IMARC Group expects the market to reach USD 2.9 billion by 2033, exhibiting a growth rate (CAGR) of 5.3 per cent during 2025- 2033. Considering this, we recommend Fiem Industries Ltd for our choice scrip recommendation for this issue of the magazine.

The company has a strong base of 50 OEMs, including Honda, TVS, Yamaha, Suzuki, Royal Enfield, and others. In FY25, 92.99 per cent of the company’s revenue was derived from domestic OEMs, with the remaining coming from the replacement market and exports. During the same period, 97.18 per cent of revenue was generated from the twowheeler segment, while the four-wheeler segment contributed the remaining 2.82 per cent. On the product mix front, in FY25, 43.39 per cent of the revenue came from Automotive LED Lighting, 29.79 per cent from Automotive Lighting, 11.11 per cent from Rear View Mirrors, 9.84 per cent from Plastic Moulded Parts, and the remaining 5.87 per cent from other products.

In Q4FY25, on a consolidated basis, revenue increased by 14.31 per cent YoY to ₹634.15 crore compared to ₹554.79 crore from the previous year’s same quarter. Net profit stood at ₹58.88 crore compared to ₹46.33 crore, a YoY increase of 27.08 per cent. In FY25, the company’s PAT crossed ₹200 crore for the first time, reaching ₹204.96 crore, an increase of 23.60 per cent YoY.

Fiem Industries continues to demonstrate strong growth momentum, outperforming the Indian two-wheeler market, which grew by 11 per cent in FY25, by achieving a robust 20 per cent growth. The company is steadily advancing its technological edge with a 100 per cent LED based new product pipeline. LED products offer at least twice the realization compared to conventional halogen lamps, and in some cases, even higher. During FY25, Fiem undertook a capital expenditure of ₹138.28 crore. Looking ahead, the company has outlined a capex plan of approximately ₹200 crore over the next three years for routine operations, and an additional ₹200 crore could be invested in the four-wheeler business over the next three to four years.

The company’s expansion into the four-wheeler segment is gathering pace, supported by a strong order pipeline. Fiem is currently developing over 100 projects using modern platforms like CAN-based systems, software integration, and animated lighting. The request for quotation pipeline for the passenger vehicle business alone stands at around ₹700 crore. The company’s management has guided for a 15–20 per cent topline growth over the next 3–5 years.

On the valuation front, the shares of the company are trading at a PE of 26.4x, below the industry PE of 28.4x and above its three-year median PE of 18.9x; however, the PEG ratio is below one. The company's three-year sales growth and profit growth stand at 15.5 per cent and 29 per cent, respectively. Fiem Industries is well positioned to capitalise on the market; hence, we recommend a BUY.

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