De-lightful performance
Major portion of the company's sales come from supplies to scooters and LED lighting industries, which are on fast growth track
| Fiem Industries |
| 532768 |
| B |
| FIEMIND |
| INE737H01014 |
| FIEM@IN |
| FIIN.BO |
| Rs 10 |
| Rs 945 / Rs 452 |
| Rs 819 (as on 29 April 2016) |
Fiem Industries is one of the leading manufacturers of automotive lighting & signaling equipments and rear view mirrors. Its major business comes from the two-wheeler segment of the vehicle industry. It has a wide range of lighting systems and rear view mirrors, sheet metals parts and plastic components for two and four wheeler. It's diversified products portfolio ranging from rear view mirrors, head lamps, tail lamps, signalling lamp, roof lamps, wheel covers, warning triangle, complete rear fender assembly, frame assembly, mudguards, LED Display Panels and various sheet metal & plastic parts etc. is capable of catering to the needs of almost all segments of automobile industry viz., four-wheelers, LCVs, HTVs and tractors.
The company has been supplying to almost all major OEMs in the domestic market as well as few global OEMs. Besides some global Tier 1 automotive lamp manufacturers.
Proximity of its plants to its OEM customers gives logistic support.
Its existing plants are located at Kundli (Sonepat, Haryana) (Unit I), Hosur (Tamil Nadu) (Unit II & III) and Mysore (Karnataka) (Unit IV), Hosur (Tamil Nadu) (Unit V) and Nalagarh (Himachal Pradesh) (UnitVI), Rai (Sonepat, Haryana) (Unit VII) & Tapukara (Rajasthan) (Unit VIII). The proximity of its plants to OEM customers offers logistic support.
Its commitment to customer's satisfaction in terms of quality, cost, just in time delivery and services is amply reflected in the repeat orders and awards from customers. It has had the opportunity of being associated with some of prestigious OEM customers since the start of their operation in India. In its quest for continuous improvement, FIEM has acquired certifications such as ISO/TS 16949:2009, ISO 9001:2008, ISO 14001:2004 & OHSAS 18001:2007. It has also acquired certification for conformity of production form RDW Netherlands.
Leader in supplies to scooter segment
The company is one of the biggest suppliers of automotive lighting and rear view mirrors to scooter segment and sees better growth trajectory with the increased acceptance of scooters.
Has diversified in fast growing LED Lighting business for indoor and outdoor applications
While the company will continue to solidify its position in Auto-component business by judiciously seizing the strategic growth opportunities and expanding its product portfolio, it has gone in for diversification for manufacturing of LED Luminaries for indoor and outdoor applications such as Recess Panels, down lights, spot lights, LED Bulbs & LED Tribe Lights, Bay Lights, Flood Lights, Solar based Lantern and Street lights etc.
There is a huge opportunity in LED
Energy Efficiency has become one of the most important issues of the Century to curb the greenhouse gases and to tackle the global climate changes.
The LED market has emerged as one of the fastest growing industries in India. This industry has been majorly driven by factors such as falling prices of LED lights, increasing initiatives taken by the government and rising concerns with respect to energy conservation. Further, modernisation of Indian Railways, Transport Infrastructure Development and Metro Systems will give a big boost to the LED Displays (IPIS).
In view of the fact that LED Luminaires consumes very less Electricity in comparison to incandescent and CFL, by use of the LED lighting, substantial power can be saved. Therefore, the future is for LED technology and there is no dearth for business for LED lighting in the near future. The company has taken pro-active steps with rapid expansion of product range and strives for big business from Railways, Central & State Government, Metro, Overseas Market etc.
This business will bring faster growth to the company, because now the company—will be covering three different market segments of Lighting —Automotive, LED In-door and Out-door and Railways. It has dedicated plans to keep its expansion programme in the LED area and would like to bring a very large range of products in the near future in order to become a very prominent player in this field.
LED lighting has been widely accepted globally in place of incandescent and CFL and emerging as the best environment friendly and most efficient lighting source. India is also emerging as a very big market for LEDs, and provides a huge growth opportunity.
Government agencies like the Ministry for Renewable Energy and the Bureau of Energy Efficiency were instrumental in raising awareness on LED's benefits in towns and villages, to the extent of distributing free solar LED lanterns in villages and offering subsidies on them. Many municipalities and corporations across the country have adopted LED for street lighting applications. As a result, the Indian business to government (B2G) in LED lighting market is witnessing robust growth. In addition, the government sector has cemented the belief that LEDs are the way forward for the country's power woes.
LED Lighting and IPIS have great synergies in designing, development and manufacturing with the existing automotive lighting of the company.
During next 4-5 years, use of LED's to be driven by replacement of streetlights, down lights and retrofit of LED lamps under the government's recent initiative called the "National Programme for LED based home and street lighting", launched by the Honourable Prime Minister Narendra Modi, LED bulbs shall be used to replace existing ICLs in domestic households. Similarly, existing street lights have started to be replaced with cost effective LED Lights.
Incandescent Lamps are primarily used for domestic household lighting. Under the government's initiative, it is expected that ICL's in India top 100 cities would be replaced by LED Bulb to encourage energy efficiency and cost savings. As a step towards phasing out of ICL's and increasing the usage of LED's, ICL will be banned in due course. A total of 780mn ICL's were sold in CY13 (758mn in CY12) as per ELCOMA. Replacement of these ICL's by LED Bulbs which use 85% less energy would help save a total of 50bn units and a cost savings of Rs 2500 crore.
To tap this growth opportunity, Company has developed a large range of LED products as under:
Indoor LED lights: Indoor LED lights find applications in Commercial, Industrial, Residential and other buildings such as Showrooms, Offices & Bank, Malls, Factories, Industrial shed, Warehouses, Residential Houses/Flats etc. LED Torches have safety features like glass breaking, seat belt cutter and warning lights which helps the vehicle driver during emergency.
Outdoor LED Lights: Outdoor LED lights find applications in Roads, Highways, Tunnels, Open spaces in the building compounds such as Farm houses, Amusement parks, Hotels, Banquets, Gardens & parks, Residential apartments, Institutional & Industrial compounds etc
Integrated Passenger Information System (IPIS) also provides huge opportunity in Indian Railways and state transport buses. Modernization programme of Indian Railways which covers platforms and passenger information/announcement system is very big opportunity. State transport authorities are installing IPIS system in its buses. Private institutions like school buses also use this system.
The management believes that these two additional businesses will drive growth of the Company in next phase. Management has done maximum backward integration by manufacturing almost all components of LED Luminaire in-house to maintain stringent quality standards and control the costs, so that company can offer high quality products at competitive prices.
Apart from these products, it has also developed complete LED display paneV system for Railways, Metros, Taxies which have a very large potential in the near future. It is already, supplying LED Display System for Bus Manufacturers, State Transport Corporation, schools and Educational Institutions.
The real strength of the company is that it also manufactures the components of LED Luminaires Including LED driver in-house. It is fully equipped for all Plastic Parts, Sheet Metal Parts, Optics design etc. and only LED is outsourced. This helps it to meet its strategy, which is focused on supply of best quality products at right price.
Innovative R&D
The company has its own Government approved R&D Centre, where its Engineers have developed innovative products including LED Drivers, which is USP of the company because it make its LED lumines most competitive, highly reliable with trouble-free performance.
The company is further strengthening its capabilities on all fronts whether manufacturing, R&D, testing, quality or marketing. In this new phase of development, it remains fully confident of the growth potential of its business.
Its R&D Department is actively working on new development for introducing High Power LED Lighting, LED Lighting, and Intelligent LED Lighting.
Performed well during difficult times – December 2015 quarter sales rise 27% and PAT jumps 55%
The economic scenario continues to be fraught with challenges amid slower growth and uncertainties. Operating in such difficult and testing environment was not less than a challenge.
Despite all economic challenges, difficult situation sales grew 27% to Rs 258.59 crore in the quarter ended December 2015. OPM, improved from 12.1% to 12.9% taking OP up 37% to Rs 33.43 crore.
Other income fell 8% to Rs 59 lakh and interest expenses jumped 47% to Rs 4.24 crore. As depreciation grew 9% to Rs 8.39 crore, PBT grew 47% to Rs 21.39 crore.
After providing for tax (up 28% to Rs 5.72 crore), PAT rose 55% to Rs 15.67 crore.
Nine months sales are up 18% and PAT is up 31%
For the nine months ended December 2015, sales grew 18% to Rs 689.17 crore. OPM, improved from 12.2% to 12.5% taking OP up 21% to Rs 87.34 crore.
Other income grew 49% to Rs 1.32 crore and interest expenses grew 20% to Rs 10.64 crore. As depreciation grew 6% to Rs 24.25 crore, PBT grew 30% to Rs 53.77 crore.
After providing for tax (up 28% to Rs 16.3 crore), PAT rose 31% to Rs 37.74 crore.
Outlook
The company is essentially catering to two-wheeler and LED lighting industries, both of which are currently doing well and are likely to continue to do well.
Valuation
In FY 2016, we expect the company to register sales and net profit of Rs 972.48 crore and Rs 54.02 crore respectively. On equity of Rs 11.96 crore and face value of Rs 10 per share, EPS works out to Rs 45.2. This EPS is expected to grow to Rs 53.6 in FY 2017.
The share price trades at Rs 819. P/E on FY 2017 projected EPS works out to 15.3.
| 1103 (12) | 1203 (12) | 1303 (12) | 1403 (12) | 1503 (12) | 1603 (12P) | 1703 (12P) | |
| Sales | 420.84 | 533.54 | 602.21 | 718.42 | 824.77 | 972.48 | 1118.35 |
| OPM (%) | 9.0 | 12.7 | 11.6 | 12.3 | 12.4 | 12.7 | 12.9 |
| OP | 37.75 | 67.65 | 69.87 | 88.48 | 102.44 | 123.83 | 144.27 |
| Other inc. | 0.46 | 0.30 | 0.35 | 0.67 | 0.90 | 1.33 | 1.53 |
| PBIDT | 38.21 | 67.95 | 70.22 | 89.14 | 103.33 | 125.16 | 145.80 |
| Interest | 9.50 | 20.76 | 12.93 | 14.44 | 12.04 | 14.76 | 16.98 |
| PBDT | 28.71 | 47.19 | 57.29 | 74.70 | 91.29 | 110.40 | 128.82 |
| Dep. | 12.98 | 16.88 | 18.35 | 21.79 | 30.63 | 32.68 | 35.95 |
| PBT | 15.73 | 30.31 | 38.94 | 52.92 | 60.66 | 77.72 | 92.88 |
| Total Tax | 4.30 | 9.17 | 11.63 | 15.52 | 18.40 | 23.70 | 28.79 |
| PAT | 11.43 | 21.14 | 27.31 | 37.40 | 42.26 | 54.02 | 64.08 |
| EPS (Rs) * | 9.6 | 17.7 | 22.8 | 31.3 | 35.3 | 45.2 | 53.6 |
| * on current equity of Rs 11.96 crore; FV Rs 10 each Face Value: Rs 10 each (P): Projections Figures in Rs crore Source: Capitaline Databases | |||||||
| 1603 (3) | 1503 (3) | Var. (%) | 1512 (9) | 1412 (9) | Var. (%) | 1503 (12) | 1403 (12) | Var. (%) | |
| Sales | 258.59 | 202.88 | 27 | 698.12 | 592.27 | 18 | 824.77 | 718.42 | 15 |
| OPM (%) | 12.9 | 12.1 | 12.5 | 12.2 | 12.4 | 12.3 | |||
| OP | 33.43 | 24.47 | 37 | 87.34 | 72.22 | 21 | 102.44 | 88.48 | 16 |
| Other inc. | 0.59 | 0.64 | -8 | 1.32 | 0.89 | 49 | 0.90 | 0.67 | 35 |
| PBIDT | 34.02 | 25.11 | 35 | 88.66 | 73.10 | 21 | 103.33 | 89.14 | 16 |
| Interest | 4.24 | 2.88 | 47 | 10.64 | 8.87 | 20 | 12.04 | 14.44 | -17 |
| PBDT | 29.78 | 22.23 | 34 | 78.02 | 64.23 | 21 | 91.29 | 74.70 | 22 |
| Dep. | 8.39 | 7.66 | 9 | 24.25 | 22.90 | 6 | 30.63 | 21.79 | 41 |
| PBT | 21.39 | 14.57 | 47 | 53.77 | 41.34 | 30 | 60.66 | 52.92 | 15 |
| Total Tax | 5.72 | 4.48 | 28 | 16.03 | 12.49 | 28 | 18.40 | 15.52 | 19 |
| PAT | 15.67 | 10.09 | 55 | 37.74 | 28.84 | 31 | 42.26 | 37.40 | 13 |
| EPS (Rs) * | 52.4 | 33.7 | 42.1 | 32.1 | 35.3 | 31.3 | |||
| * Annualised on current equity of Rs 11.96 crore; FV Rs 10 each Face Value: Rs 10 each Figures in Rs crore Source: Capitaline Databases | |||||||||
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