FIEM Industries - Riding the tailwinds of 2W boom | Q1FY27 Company Update

FIEM’s 1QFY27 performance was largely in line with our estimates, driven by strong demand for 2W including EV, continued shift towards premiumization (Led replacing halogen) and addition of new models. However, the margins were under pressure due to high RM cost and high employee expenses. RFQs for new product development of Mercedes, new order wins with Force Motors, showcases gradual product acceptance. A robust pipeline of new 2W projects including sole supplier status at several EV 2W, tailwinds in the domestic 2W industry, shift to LED lightings and best in industry margins, should drive further outperformance for FIEM. We have adjusted our margin estimates to account for the input cost pressure in FY27E, leading to a 3% cut in earnings. FY28E estimates remain largely unchanged. The resignation of CEO and delay in meaningful ramp up of the 4W lighting business has led to downward revision in our valuation multiple. We value FIEM at 20x Jun’28E earnings (21x previously) to arrive at TP of Rs 2,805 (Rs 2,790 previously). The increase in TP is mainly due to valuation roll forward, partially offset by cut in target multiple and earnings. We maintain BUY rating due to attractive valuations.

Fiem Industries ltd. Stock Price Chart

Strong 2W demand drives revenue:

FIEM reported robust revenue growth of 17.7% yoy at Rs 7.8bn, in line with our estimates. The outperformance was driven by strong demand for 2W including EV, continued shift towards premiumization (LED replacing halogen) and addition of new models. All the three leading customers of FIEM (Honda, TVS and Yamaha) witnessed strong production growth in 1QFY27, in turn uplifting revenues for FIEM.

High RM and employee cost dent margins:

FIEM’s EBITDA margins degrew by 18bps yoy to 13.4%, due to pressure from high RM and other input costs along with minimum wage hikes and increments. This translated into EBITDA of Rs 1bn, up 16.1% yoy, while PAT came in at Rs 649mn, up 12.8% yoy.

2W segment in the fast lane due to LED gains, 4w to sustain its trajectory:

FIEM’s execution of the second order for Mercedes leading to RFQ’s for new product development, receipt of new orders (stop lamps) for M&M’s Bolero variant, order for Force motors, number plate lamps for all models of Mahindra demonstrates gradual product acceptance in the 4W space. The shift towards LED technology is progressing strongly, with the share of LED lighting increasing from 40% of lighting revenue in FY21 to 63% in 1QFY27, contributing massively to the value growth. This growth trajectory is expected to continue, supported by a robust order book, which is completely LED-focused, including new Yamaha models and multiple new projects under development for TVS, Hero and Royal Enfield. FIEM has received orders to supply LED lighting for the new Ather EV scooters and all models of Hero Vida EV scooters (starting next year). We have adjusted our margin estimates to account for the input cost pressure and high employee cost in FY27E, leading to a 3% cut in earnings. FY28E estimates remain largely unchanged. The resignation of CEO and delay in meaningful ramp up of the 4W lighting business has led to downward revision in our valuation multiple to 20x (previously 21x).

Valuation and risks:

We forecast a Revenue/EBITDA/PAT CAGR of 14%/15%/18% over FY26-28E. We value FIEM at 20x Jun’28E earnings (21x previously) to arrive at TP of Rs 2,805 (Rs 2,790 previously). The increase in TP is mainly due to valuation roll forward, partially offset by cut in target multiple and earnings. We maintain BUY rating due to attractive valuations. Risks: Slowdown in ICE/ EV 2W sales, delay in 4W business.

Company website: https://fiemindustries.com/

*CMP is as per report published date

Click to download the full FIEM Industries Ltd Q4FY26 Company Update

Analyst:

• Sahil Sanghvi - Research Analyst, Institutional Equities (NISM-201900004744)
• Uvais Khatri - Research Associate, Institutional Equities (NISM-202300049054)

Open your MNCL Demat Account

FAQs on FIEM Ltd Q1FY27 Company Update

These FAQs highlight key takeaways from MNCL’s institutional equity research on FIEM Industries, covering performance trends, growth drivers and risk factors relevant for long-term investors.

How did FIEM Industries perform in Q1FY27?

FIEM Industries reported revenue growth of 17.7% YoY to approximately ₹7.8 billion. Growth was supported by strong two-wheeler demand, EV applications, LED adoption and new model launches.

What is driving FIEM Industries' growth?

Key growth drivers include domestic two-wheeler demand, increasing LED penetration, EV lighting requirements, premiumisation and new business wins from automotive OEMs.

How important is LED lighting for FIEM?

LED lighting has become an increasingly important growth driver. Its share of FIEM's lighting revenue increased from 40% in FY21 to 63% in Q1FY27, supporting higher content and value per vehicle.

What is FIEM's exposure to electric two-wheelers?

FIEM has a growing EV opportunity through lighting programs for electric two-wheelers, including orders for Ather EV scooters and Hero Vida EV models, according to the supplied research.

What happened to FIEM's margins in Q1FY27?

EBITDA margin declined 18 basis points YoY to 13.4%, mainly due to higher raw-material and input costs, along with increased employee expenses. EBITDA nevertheless grew 16.1% YoY.

What could drive FIEM's future growth?

A robust pipeline of LED-focused two-wheeler projects, new model launches, EV programs, increasing premiumisation and gradual expansion of the four-wheeler lighting business could support medium-term growth.

What is the FIEM Industries target price?

The supplied research maintains a BUY rating and assigns a target price of ₹2,805 versus the reported CMP of ₹2,414. This is an analyst estimate and does not guarantee future returns.

What are the key risks for FIEM Industries?

Key risks include a slowdown in ICE or EV two-wheeler sales, sustained input-cost pressure, delays in four-wheeler business ramp-up and execution-related challenges.

Before You Trade, Strengthen Your Foundations with These Guides

• For a stronger understanding of indicators such as RSI, VWAP, and trendlines, check our 👉 Technical Analysis Fundamentals section.
• Want to refine your risk-reward planning? Explore our insights on 👉 Position Sizing & Risk Management Strategies.
• Checkout FIEM Industries Ltd stock price chart and research report for analysis.