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Margin expansion driven by operating leverage and premium product mix:

FIEM delivered a strong FY26 performance, with consolidated revenue growing by 16.2% YoY, while EBITDA was up by 22.9% YoY. EBITDA margin expanded by 76 bps YoY to 14.1%, crossing this mark for the first time, supported by operating leverage, improved operational efficiency and a favourable product mix. The company continues to benefit from rising LED penetration and increasing electronic content in lighting systems, which enhances value-addition and supports realisation growth. The management remains confident of sustaining EBITDA margin above 14% in the medium term, aided by scale benefits, product premiumisation and a growing share of advanced lighting solutions.

Growth visibility propelled by capacity expansion & tech. investments: The company incurred capex of INR 1,083 Mn in FY26 and plans to invest ~INR 2,000 Mn in the next two years towards capacity expansion, product development and strengthening its passenger vehicle portfolio. The recently-commissioned EMI/EMC validation facility and innovation centre are expected to accelerate product development and enhance engineering capabilities. The management continues to guide for 15–20% revenue growth in the medium term, supported by increasing LED adoption, premiumisation and strong OEM relationships.

Passenger vehicle business offers significant long-term opportunity: While 2W segment continues to contribute ~96.7% of automotive revenue, FIEM is steadily expanding its presence in the passenger vehicle segment through programmes with M&M and a growing RFQ pipeline. We believe FIEM is wellpositioned to deliver sustainable growth, supported by increasing content per vehicle, expanding customer relationships, technology leadership and continued investments in capacity and innovation.

View and Valuation: We largely maintain our FY27/28E EPS estimate, and valuing the company at 20x P/E multiple on the 28E EPS and arrive at our target price of INR 2,700 (maintained). We have upgraded our rating from ‘ADD’ to ‘BUY’, supported by attractive valuation relative to peers, strong earnings growth visibility, and improving business fundamentals, offering a favourable risk-reward proposition.

Q4FY26 beats our estimate across the board

* Revenue was up 17.5% YoY and up 8.9% QoQ to INR 7,513 Mn (vs CIE estimate of INR 7,250 Mn)

* EBITDA was up 28.5% YoY and up 12.3% QoQ to INR 1,097 Mn (vs CIE estimate of INR 1,015 Mn). EBITDA margin was up 125 bps YoY and up 44 bps QoQ to 14.6% (vs CIE estimate of 14.0%)

* PAT was up 28.9% YoY and up 12.1% QoQ to INR 710 Mn (vs CIE estimate of INR 651 Mn)

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SEBI Registration no.: INZ 000160131