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In Q2FY25, Fiem industry delivered a largely in line on revenue front and lower than on PAT front. Revenue during the quarter increased by 20.2% YoY/6.0% QoQ to Rs.6.12bn. EBIDTA stood at Rs.807mn (+18.6% YoY/+2.7% QoQ). vs est of Rs.811mn. Prudent cost control measures helped to achieve margin expansion of 78bps YoY to 13.6%. vs est of 13.8%. PAT for the quarter stood at Rs502mn (+15.4% YoY/+2.7% QoQ). Lighting segment's revenue jumped by 23.8% YoY to Rs. 4.5bn, and Plastic Moulded parts, revenue grew by 25% YoY to Rs.709mn. The RVM segment witnesses a flat growth of 0.8% YoY to Rs.620mn. Management expects FY25 topline to grow by 15-20% backed by new launches by OEM increasing share revenue from PV segment. Management also guided a capex of Rs.250crRs300cr over next 2-3 years.

* The company delivered its best-ever quarterly performance in Q2 FY25, achieving 20% year-on-year sales growth and a 19% increase in net profit, underscoring the success of its strategic initiatives and robust operational execution. The Indian two-wheeler market saw production volumes reach 6.3 million units—a 12.5% year-on-year growth—driven by strong rural demand and positive consumer sentiment. Leveraging close partnerships with leading OEMs, the company effectively scaled production to capitalize on this demand.

* Key accomplishments this quarter included the launch of the new Premium Jupiter scooter from TVS Motors, featuring the company’s advanced LED lighting technology, and the Yamaha YBR 150 model for export to Brazil. In the passenger vehicle sector, progress continues with Mercedes, as the second project was delivered successfully, and the third is nearing completion. New orders from Mahindra & Mahindra, starting production in January 2025, further strengthen the company’s foothold in this segment.

* Innovation remains central, as evidenced by ongoing collaborations with OEMs to develop market-specific solutions. The company’s CapEx for Q2 totaled INR 43.42 crore, bringing first-half FY25 CapEx to INR 71.84 crore, highlighting its commitment to sustained growth and technological advancement.

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 and partnership with Gogoro. We expect FIEM to see better than industry growth in coming year backed by product diversification and capacity expansion. We roll forward valuation to to arrive at TP of Rs 1,791 with BUY rating. (18X of Sep FY27E EPS).

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