IKIO Lighting share price gains over 3%; Anand Rathi initiates coverage with a ‘Buy’ call, sees 22% upside

IKIO Lighting share price rallied over 3% on Friday. The stock gained as much as 3.47% to 329.00 apiece on the BSE. However, IKIO Lighting shares are still trading 16% below its listing price on the stock exchanges. IKIO Lighting shares made a stock market debut on June 16, 2023, with the stock getting listed at 391 on BSE, a premium of 37.19% to the issue price of 285 per share.

IKIO Lighting shares were listed at 392.5 on NSE. After listing, IKIO Lighting shares hit a high of 477.15 apiece on June 23, 2023. However, the stock came under selling pressure and hit a low of 305 on January 3, 2024. Brokerage firm Anand Rathi initiated coverage on IKIO Lighting with a ‘Buy’ rating on the stock by assigning 36x of FY25E earnings with a target price of 390 per share, implying an upside of more than 22% from Thursday’s closing price for a time horizon of 12 months.

IKIO Lighting’s export revenue has grown rapidly in the last four years on a low base and new customer acquisitions. The company added a new product line for recreational vehicles in the export division which led to such expansion. The company continues to expand into new international markets through its ODM offerings and launch of new products.

Company is looking to expand into North America, Europe and South East Asian markets as these markets offer strong demand for premium lighting products, noted the brokerage firm. It believes IKIO’s customer base across geographies and with a healthy financial position will help the company to invest in creating a wider range of product offerings in coming years.

“IKIO lighting’s Revenue and EBITDA increased by 18% and 27% CAGR from FY20 to FY23 on account of healthy product mix, operational efficiency and brand visibility. Over the years, company has strengthened its financial position through strong customers base and repeat orders, Post listing, company has repaid its borrowings which has enabled them to be a debt free entity and lower its working capital requirements in FY23," Anand Rathi said in a report.

The company’s EBITDA margin has increased from 17% to 22% from FY20 to FY23 which shows its resilience and competitive edge over its peer group. Going ahead, company plans to make surplus investment towards capacity expansion, new product lines, backward integration. In addition, it is building an international customer base, primarily in the United States.

Anand Rathi expects IKIO’s Revenue, EBITDA and PAT to grow at a CAGR of 22%, 27% and 29%, respectively, over FY23 25E. At 11:25 am, IKIO Lighting shares were trading 2.36% higher at 325.45 apiece on the BSE. Livemint tops charts as the fastest growing news website in the world to know more. Unlock a world of Benefits! From insightful newsletters to real time stock tracking, breaking news and a personalized newsfeed – it's all here, just a click away!.