FIEM Industries shares rise 5% as Kotak initiates coverage with a 'Buy'

Kotak Securities anticipates that FIEM’s robust balance sheet, strong returns, and expansion into smart meters and EV charging will ensure continued financial strength.

Shares of FIEM Industries - makers of automotive lighting - soared around 5 percent after Kotak Securities initiated coverage on with a 'Buy' call and a price target of Rs 2,140 on the stock, nearly 40 percent higher from previous close.

FIEM's product portfolio is versatile across different technologies, Kotak's note said, implying the rise in electric vehicle adoption may not disrupt the auto components maker's business.

FIEM Industries' top clients include Honda Motorcycle and Scooter India, TVS Motors Co., Yamaha Motor India, and Suzuki Motorcycle. The company makes automotive lighting and rear-view mirrors among other components.

Kotak Securities note said FIEM has a strong market position with a potential to capitalize on the reviving two-wheeler demand, which has seen an uptrend after the pandemic. The brokerage anticipates healthy volume growth in the two-wheeler industry from FY25-27, driven by rising demand and higher government spending.

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FIEM's expansion into four-wheeler LED lighting offers new growth prospects, further diversifying revenue streams. The company has outperformed the industry average, achieving an 11 percent compound annual growth rate (CAGR) in revenue over the past decade, exceeding that of the two-wheeler sector for the same period, Kotak said.

FIEM’s push to increase vehicle content, particularly with rising LED adoption in the automotive sector, is set to drive earnings and revenue growth. It has established partnerships with major players like Honda, TVS Motors, Yamaha, and Suzuki to solidify market position.

At 1:16 pm, FIEM Industries shares were trading 5.5 percent higher at Rs 1,616.50 on the National Stock Exchange (NSE). The stock has gained around 57 percent so far this year, outperforming Nifty's returns of 16 percent. In the past 1 month, the counter has risen 25 percent. In comparison, Nifty rose 5 percent during this period.

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