IKIO - IKIO Lighting

📊 NSE: IKIO 🏢 Electric Equipment 📅 Last Updated: 12/14/2025 7:56

💰 Financial Performance

Revenue Growth by Segment

Total revenue grew 31% YoY to INR 164 Cr in Q2 FY26. The 'Other Businesses' segment (including wearables and hearables) grew 71% YoY to INR 115 Cr in Q2 FY26 and 54% YoY to INR 197 Cr in H1 FY26. The ODM business experienced lower revenues, impacting overall growth momentum.

Geographic Revenue Split

Growth was primarily led by strong demand from the Middle East, specifically Dubai. The company has successfully entered the Gulf market under the product display segment, achieving profitability in its first year of operation.

Profitability Margins

Gross profit margin was maintained between 35% and 36% for Q2 and H1 FY26. Profit After Tax (PAT) margin stood at 6.6% in Q2 FY26, reflecting a sharp 358% QoQ growth from a lower base, while Cash PAT margin was approximately 11% (INR 18 Cr).

EBITDA Margin

EBITDA margin was 11.2% in Q2 FY26, a significant decline from 22-23% in the previous year. This reduction is attributed to front-loaded strategic expenses, higher employee costs, and investments in new product categories to fuel future growth.

Capital Expenditure

The company is investing INR 150-160 Cr in Phases II and III of its Noida manufacturing facility across FY25 and FY26. As of September 30, 2025, INR 142 Cr of IPO proceeds has been deployed for the new facility out of an available INR 212.3 Cr.

Credit Rating & Borrowing

CRISIL has assigned a 'Stable' outlook. Borrowing costs are minimized as the company utilized INR 50 Cr from IPO proceeds to complete debt repayment immediately after listing, leaving negligible debt obligations.

⚙️ Operational Drivers

Raw Materials

Specific raw materials include LED chips, Printed Circuit Boards (PCBs), plastic resins for switches, and copper components for potentiometers. These materials represent approximately 64-65% of total revenue based on gross margins.

Import Sources

Raw materials are sourced from India and global markets. The company is subject to global demand-supply conditions and price fluctuations in these regions.

Capacity Expansion

Current active capacity includes Block 1 (2 lakh sq. ft.) of a new 5 lakh sq. ft. Noida facility, commercialized in May 2024. Block 2 (2 lakh sq. ft.) is nearing completion, and Block 3 is progressing as planned to support export and domestic growth.

Raw Material Costs

Raw material costs are approximately 64% of revenue. The company uses a backward integration strategy to optimize these costs, enhance margins, and maintain quality standards across its LED and electronics lines.

Manufacturing Efficiency

Efficiency is expected to improve through better fixed cost absorption as operations scale up in the new Noida facility. Current focus is on driving cost optimization and operational efficiencies across all business functions.

Logistics & Distribution

The company is expanding its distribution reach into the Middle East (Dubai) to support its new product display segment and export-oriented growth from the Noida facility.

📈 Strategic Growth

Expected Growth Rate

25-30%

Growth Strategy

Growth will be achieved by operationalizing the full 5 lakh sq. ft. Noida facility to enhance exports, scaling the new wearables and hearables segment which grew 71% YoY, and expanding the profitable Gulf market presence.

Products & Services

LED Home Lighting, Solar Panels & Systems, Rotary Switches, Potentiometers, Wearables (smartwatches), Hearables (earbuds), and Product Display systems.

Brand Portfolio

Fine Technologies (original brand for switches and potentiometers).

New Products/Services

New product lines include wearables and hearables, which contributed INR 115 Cr (70% of Q2 revenue), and solar panels/systems aimed at the domestic market.

Market Expansion

Targeting the Middle East (Dubai) for product displays and global markets for LED exports via the new Noida facility capacity.

🌍 External Factors

Industry Trends

The industry is shifting toward Electronic Manufacturing Services (EMS) and ODM for consumer tech. IKIO is positioning itself by diversifying beyond lighting into high-growth wearables and solar energy.

Competitive Landscape

Intense competition from organized players in the LED and electrical component sectors limits negotiating power with suppliers and customers.

Competitive Moat

The moat is built on backward integration and longstanding customer relationships. This is sustainable as it provides a cost advantage and quality control that competitors find difficult to replicate without significant capex.

Macro Economic Sensitivity

Highly sensitive to Indian GDP growth and global demand-supply conditions, which dictate the pricing of finished goods and consumer discretionary spending on electronics.

Consumer Behavior

Shift toward energy-efficient LED lighting and rapid adoption of smart wearables are driving the 54% H1 growth in the 'Other Businesses' segment.

Geopolitical Risks

Exposure to trade barriers and economic conditions in the Middle East and other export destinations could impact the 25-30% revenue growth target.

⚖️ Regulatory & Governance

Industry Regulations

Operations are governed by Indian manufacturing standards, import/export restrictions, and government policies regarding the electronics and solar sectors.

Taxation Policy Impact

The company is subject to standard Indian corporate tax rates; changes in tax regimes or fiscal policies are noted as material risk factors for future earnings.

⚠️ Risk Analysis

Key Uncertainties

Implementation risk associated with the INR 150-160 Cr Noida project (Phases II and III) and the ability to sustain margins above 12-13% while scaling new product lines.