Add FIEM Industries Ltd Target Rs.2,593 - Choice Broking
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Breakthrough into PV segment:
Fiem, during the quarter won new business to supply full LED headlamp solution for high end European car makers from development & design stage and is also working with various Indian OEMs where approval is in final stage. Export order from EU clients to start production from Q4FY25 at initial level there won’t be any fresh capex required
Gogoro partnership to bring higher content value
The memorandum of understanding (MoU) entails FIEM manufacturing and assembling key components for EVs, including Hub Motor Assembly, Electric Control Unit (ECU), and Motor Control Unit (MCU). This collaboration, coupled with FIEM's supply of lighting and mirror solutions for Gogoro's domestic and export markets, positions the company as a primary beneficiary of the EV revolution.
Initially, this production is for the domestic market and will begin with CKD (Completely Knocked Down) units. The company expects to localize this product within the next year. The content value is expected to be in the range of Rs.13-14k per unit, with margins improving over time, albeit being lower initially. From next quarter the company will start supplying MCU and HUB motors to Gogoro and going forward expects to supply EV related components to other OEMs as well. We expect that FIL will be the primary beneficiary of this EV opportunity over the next few years
Leading market share in EV lighting:
Current EV revenue share is around ~6% and the company boasts a decently large client base in EV i.e. 35+ such as Ola, Okinawa, Bounce, and Hero Electric and is also in discussion with incumbent OEMs. Company will also supply lighting solutions to the newly launched OLA scooter and MC in EV space
Outlook & Valuation:
We maintain our positive view on the stock driven by continued dominance in the E-2W lighting segment, healthy free cash flow generation, and the addition of new clients, diversification in to PV segment (won new order in Q3 as export order to EU OEM) and partnership with Gogoro. We expect FIEM is poised for healthy growth in the coming year. We introduce FY26 and roll forward valuation to Sep-25 to arrive at TP of Rs 2593 with ADD rating. (19X of Sep-25E EPS).
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SEBI Registration no.: INZ 000160131
