FIEM Industries Ltd. share price target

Outlook: Due to the second lockdown, 1QFY22 was a dampener for the entire auto industry. Post that, we feel that Fiem is now leveraging its diversified client base and leveraging old relations to cater to export markets too. The lamp development for foreign models (Yamaha & Harley Davidson) and domestic development (Hero Motocorp & TVS) should continue to create more visibility for Fiem. We maintain that...

Outlook: As Fiem is already supplying to key electric vehicle players like Okinawa, Ampere, Hero Electric, Revolt, and Electrotherm, we feel that it has a strong firstmover advantage with key players in the 2-wheeler EV industry. While, due to the second lockdown, 1QFY22 was a sequential dampener for the entire auto industry, we feel 2-wheelers demand remains a long-term positive story. With a healthy...

Outlook: With utilisation stable at ~75% since 2QFY21, we feel that HMSI's elongated maintenance shutdown in 3QFY21 was the prime reason for Fiem's revenue decline in FY21. Fiem's 4QFY21 production performance has been resilient and while due to the second lockdown, 1QFY22 is expected to be a dampener for the entire auto industry, we feel 2-wheelers demand remains a long-term positive story. With a...

Outlook: With utilisation stable at ~70-75% since 2QFY21, we feel that HMSI's elongated maintenance shutdown was the prime reason for this stagnation and it should climb higher from 4QFY21 onwards. FIEM's orders from Piaggio are fully LED and this trend should further boost the shift from halogen to LED. The AFI JV staying in positive territory is a good sign for the future. While we maintain our view that FIEM is aggressively trying to grab market share by supplying to new models of existing clients, new sizeable 2W clients and entry into 4Ws will be the key triggers for Fiem's next leg of the growth story....

FIEM industries Ltd., is one of the leading manufacturers of automotive lighting & signaling equipment and rear view mirrors in India and its major business comes from the two wheeler segment (96% in FY20) of the automotive components industry. FIEM has diversified into LED Luminaries for indoor and outdoor applications and integrated passenger information system with LED display (IPIS). The company has 9 manufacturing facilities located close to OEM...

We change our rating to BUY from ACCUMULATE with a revised TP of Rs670 (Rs650 earlier). FIEM's 2QFY21 performance has been outstanding on the EBITDA margin front and the Aisan Fiem Automotive India (AFI) JV also turned positive for the first time contributing positively to FIEM's PAT. As promised, the management continued its debt repayment of ~Rs100mn per quarter, started supplying to new models and continued to bag new orders. The management is being extremely prudent with its low capital expenditure and the company is on the right track to diversify its OEM client base. We feel that while 2QFY21 was buoyed by festive months too, the overall...

It is the sheer grit of the management to diligently repay its long-term debt in this environment while bagging new global orders. Fiem's 1QFY21 results were a one-off arising from zero production in April and slow pick-up amidst lockdown. We still feel that the management is being extremely prudent with its low capital expenditure and cash conservation. In our view, the company is on the right track to diversify its OEM client base and greater personal mobility should provide an early advantage to two-wheelers. We give an ACCUMULATE rating with a revised TP of Rs650. Gross Margin slips: The top line declined by 81% YoY to Rs67mn in Q1FY21. The...

INDIA l Institutional Research l Automobile l July 6, 2020 Fiem Industries l BUY l TP: 524 Improving working capital cycle; expect better capital allocation | Result Update 4QFY20 Fiem's Q4FY20 results were encouraging in terms of margin stability and good cost control displayed by the company in a prolonged slowdown. We feel that the management is being prudent in lowering CAPEX and conserving cash and in turn focussing on debt repayment in these unprecedented times. The plan to diversify revenue stream and product portfolio are intact, though with a perceptible lag due...

INDIA l Institutional Research l Automobile l June 6, 2019 Fiem Industries l BUY l TP: 620 Strong clientele, LED shift, BS-VI, new alliances to illuminate growth path Fiem Industries (FIEM), one of the leading Indian manufacturers of automotive lighting & signalling equipment and rear-view mirrors, is largely focused on 2wheeler (2W) industry with HMSI and TVS Motor as major clients. Notably, the company's ten-year sales CAGR is almost double of 2W industry volume CAGR. FIEM is all set to continue its growth momentum owing to the emergence of newer trends like the shift towards LED & increased focus on safety, BSVI implementation, its...

INDIA l Institutional Research l Automobile l June 6, 2019 Fiem Industries l BUY l TP: 620 Strong clientele, LED shift, BS-VI, new alliances to illuminate growth path Fiem Industries (FIEM), one of the leading Indian manufacturers of automotive lighting & signalling equipment and rear-view mirrors, is largely focused on 2wheeler (2W) industry with HMSI and TVS Motor as major clients. Notably, the company's ten-year sales CAGR is almost double of 2W industry volume CAGR. FIEM is all set to continue its growth momentum owing to the emergence of newer trends like the shift towards LED & increased focus on safety, BSVI implementation, its...

Due to weak demand and high inventory, the two wheeler manufacturers are expected to cut production in the near term and that will likely keep FIEM's growth subdued in the near term. However, we expect demand would likely pickup in 2HFY20 supported by weak base and pre-buying ahead of BSVI implementation. In our view, continued LED transition will drive revenue growth for FIEM in FY20. Our recent interaction with auto ancillary players supplying automotive lighting to the auto industry pointed towards higher penetration of LED content in automotive lighting going forward. With stability in input cost...

Fiem Industries Ltd (Fiem) reported weak set of numbers in Q2FY19, which was below our estimates. While revenue growth was healthy at 20.8% YoY, the operating profit grew at meagre 5.6% YoY as margins declined 145bps during the quarter. Further, dismal operational performance and lower other income led to net profit growth of 3% YoY.

We maintain our Buy rating on FIEM Industries with TP of Rs1,150. We expect FIEM's growth to continue aided by strong growth prospects of its two biggest clients namely Honda Motorcycle and Scooter India (HMSI) and TVS Motor, along with richer product mix. 1QFY19 top-line performance was in-line with estimates, as auto segment posted strong growth. However, pain in the LED business continues. Had it not been for issues in the LED business, performance would have looked much stronger at profit levels. We remain convinced of FIEM's medium-to-long-term growth opportunity as the company continues to remain a strong 2W auto ancillary company. Many 2W OEMs are expected to shift towards LED...

Fiem Industries Ltd (Fiem) reported strong set of numbers in Q4FY18, which were ahead of our estimates. Net revenue and EBITDA grew at 37.3% and 53.6% and reported strong PAT of Rs. 15.3 cr as against a loss in Q4FY17.

Fiem Industries reported good Q3FY18 result, as revenue and Net profit increased by 21.9% and 39.6% respectively yoy. Automotive segment reported healthy growth, whereas LED Luminaries segment continued to disappoint. We are positive on the two wheelers and four wheelers auto segments and expect double digit growth over the next 2-3 years. Fiems foray into LED lamps would drive its growth in the coming years.