Fiem Industries Limited (FIEMIND.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '26 Earnings Conference Call of Fiem Industries Limited hosted by Monarch Networth Capital Limited. Kindly note, this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I would now hand the conference over to Mr. Sahil Sanghvi from Monarch Networth Capital Limited. Thank you, and over to you, sir.

Yes. Thank you, Muskan. Good evening, everyone. On behalf of Monarch Networth Capital, I welcome you all to the Q1 FY '26 conference Call of Sam Industries Limited. We will start the call with the initial comments about the results and the future outlook of the company, and then we'll open the floor for question and answers. Now I'll hand over the call to Mr. J.K. Jain, Chairman and Managing Director of the company. Over to you, Jain, sir.

Thank you. Good afternoon, and welcome to the Q1 FY '26 Earnings Call of Priyam Industries Limited. Joining me on today's call are Rahul Jain, Joint Managing Director; Rajesh Sharma, Joint Managing Director; Vineet Shani, CEO and Director; Arvind Chohan, Company Secretary; O.P. Gupta, CFO; and other members of the finance team. Our investor presentation and the results are now available on our website and the stock exchange. We trust you must have reviewed the same. Let me start with a brief overview of Indian economy. India remains the fastest-growing major economy in the world forecasted to grow at 6.4% in FY '26. This strong performance is driven by the robust However, the recent imposition of the steep U.S. tariff now totaling up to 50% on Indian export is creating near-term headwind for some sectors. Fiem remains unaffected with this challenge. The long-term outlook remains optimistic and strong. India's strong economic fundamentals, low inflation, healthy government finances and ongoing reforms will continue to boost the sentiment. Efforts to expand export market and build new trade agreements like the recent U.K. FPA should keep the country on a steady growth path. Now let me turn my attention to the domestic automotive industries. The Indian 2-wheeler industries began FY '26 on a soft note with domestic production volumes of 5.9 million units, which is flat over last year. This is largely seasonal and demand typically softened in the early months of this fiscal year. With the festive season kicking in, supported by a good monsoon, the industry is poised for a healthy rebound. Against this backdrop, SRAM has been able to post a very strong performance for Q1 FY '26 -- our sales have grown more than 13% to INR 649 crores, and we were able to deliver a PAT of INR 56 crores. This growth was fueled by the robust demand from our key OEM customers like TVS, Royal Enfield and Yamaha, which has contributed to this significant growth. Let me now turn my attention to the 4-wheeler segment, which continue to move forward.

[Operator Instructions]

We are also very pleased to share that we have received development orders for 3 additional products from F Motors. Our engagement with the customer on new technology is progressing well. This successful entry into the 4-wheeler space marks a significant leap forward in our journey to become a multisegment global player. Building on this performance, SA remains well positioned to capitalize on industry recovery through our technology investment and customer parts. One such investment is our state-of-the-art EMCEMI electronic validation laboratory now under installation and set to be the first of its kind in the Indian automotive lighting industries. This facility will unite our mechanical, optical and electronic capabilities under one room. As lighting becomes increasing integrated with electronics and communication features, this lab will be a game changer, strengthening our technological edge and reinforcing Firm's leadership in performance and quality. Looking ahead to FY '26, I'm confident in both the industry's growth potential and F strong position to capitalize on it. With this, I hand over to Mr. O.P. Gupta and the finance team to update on operational performance.

Thank you, sir. Good afternoon to everyone. I would like to present the Q1 numbers for FY '26 compared to Q1 of FY '25. During the quarter, the company has registered sales of INR 69.7 crores as compared to INR 57.61 crores over the same quarter last year, registering a growth of 13.1%. LED lighting share in total automotive lighting stands at 6.9% EBITDA in Q1 is INR INR7 crores same quarter last year with EBITDA margin of 13%. The PAT of the company has increased to INR 5 crores as compared to INR 4.2 crores in Q1 of FY '25, rep13.,apEx INR 16.5 crores. With this, I end the financial brief and now the floor is open for question

[Operator Instructions] my first question is from Shubham, [indiscernible] please go ahead.

So we are our non-LED portfolio around 170 -- do you see this scale further going down or the market in terms of -- and do you think that this number can sustain at these levels?

Can you please repeat this question? We lost you in between.

I'm sorry to interrupt. Sir, your audio is not clear. We can't hear you properly.

Yes. My question was that our non-LED portfolio has been stable around INR 170 crores to INR 180 crores. So I just wanted to ask that do you see this scale further going down? Or should we sustain at these?

Yes. Is there any second part, on the LED, what we maintained is that we are currently at 64% as our total automotive sales. And this will continue to go up. And over the next couple of years, this number should increasingly go up because our pipeline is 100% LED. All the new models that we are doing is LED.

Okay. Got it. My next question was with our LED business scaling pretty strongly, as you mentioned, and how many do we plan to add over the next 2 years? And what percentage of regular CapEx will be behind molds?

You may want to just repeat that question. operator, if you could sort of help with the line, we are getting a lot of wide in between, we can't hear this. So if you could repeat that question.

Yes, I'll repeat it. Yes, definitely. So I was saying that our LED business has been scaling pretty strongly. So how many SMD lines do we have as of now? And how many do we plan to add over the next 2 years? And what percentage of regular CapEx will be behind

So we are looking to add another 10 SMT lines over the next couple of years. And how do we have the current... Project, we have 10 lines in our company, and we are planning for another 10 machines in next 1 year.

Okay. And what percentage of regular CapEx will be behind molds?

See, the total CapEx, if I was to highlight for the current year is around INR 75 crores to INR 100 crores. This includes everything. There's a new facility that is being planned, new CapEx on SMT lines and so on. So that's the composite.

Okay. Got it. My next question was about our key customer, HMSI. So like some growth that we have achieved would be due to the better realizations like from the shift to LED. But apart from this, if we see that growth with HSMI versus their production rate, it has been at par or even lower at times. So like would you be able to provide any color on this?

So our growth is largely in line with how much growth HMSI is showing. HMSI has almost had a flat quarter this year. And marginal 1 or 2 percentage points here and there is basically a result of a specific product mix. There are 1 or 2 models that will go up. They could be non-LED that could result in a lower realization and so on. So -- but largely, the customer -- our share -- wallet share with the customer is absolutely the same or better and our production is in line with their own.

But sir, on this, if we see that about our competitors, they have been winning major business from HMSI and like you could say example, [indiscernible], and they also have a further pipeline build. And we also have -- PM has been a major supplier to HMSI. So considering our growth versus our competitors' growth with HMSI, is there any share that we have lost?

No, we have not lost any share from HMSI. And wherever there are a few products which are already in development as of now at our end will be launched during next year, a few products which are together with our competitors has already been launched. That is the only difference.

Okay. Okay. But would you be able to say that in like volume terms, how has our performance been with HMSI, if we have not lost any share, like what would be the performance in volume terms?

It's flat only. There is no change of volume, no change of share of business.

Okay. Okay. Got it. Just one request from my side. I mean, if you could start providing the wallet share figures that we used to provide. So as investors, we could have a better understanding on this.

See, the practical issue around wallet share is that you would appreciate there are thousands of models now. And every day, there's a new model, there's a new variation. There could be one model with LED, one without LED. It's very difficult to compile it. We try and compile as best as we can to give you a direction in terms of our overall market share, what it is. But model-wise, and the vagaries that you're talking about are all model-wise. One model has gone and done slightly more or less. So directionally, we want to tell you that the business is intact. Sir, your voice is not audible breaking. Yes, sir. Yes. If we look at our Hero business, it does so much.

So I just wanted to know with regard to this challenge that we are facing here, is it the challenge because of the new launches or any delay from the customer side that we the Hero business scale up that much?

Voice is breaking in between, but not about Hero business, whatever business is being taken by us from Hero is as per their event plan is on track.

Yes, sir. We haven't seen the scale up happening. So are we facing challenges there?

No, there is no challenges from our side or no challenges from customer side also, but there are a few projects which are being launched as of now under Harley-Davidson flagship are being going very slow pace, and it is being recent -- very soon we'll start the export also. You will see some of the pace in the near months.

Largely with new -- we've explained to you that with Hero, we have a lot of new orders that we are doing. And new orders, obviously, new projects, they come in, they take time for volumes to ramp up. So that will happen.

The next question is from the line of Goyal from Evest Analytics Advisors.

Congrats for decent execution. My first question is on the tariff part. You mentioned tariff is not going to affect us. So can you put some color on that, like why we are thinking in that way because maybe our customers are into export as well, right? So that doesn't affect us going forward?

Yes. So tariffs are only applicable to United States and our business directly with United States is very marginal, not significant. And even where there is that business -- our contract terms are FOB where we are not impacted the tariffs or any other levies that may arise in future is to be borne completely by the customer. So we are not impacted.

No, I'm not speaking about the direct impact I'm trying to understand about the indirect second order effect. Maybe your customer may be exporting to U.S., right? So in that case, what kind of impact can have going ahead?

No, our direct or indirect order book is not intended to America at all. The American lighting systems that eventually end up in America is very insignificant, what I highlighted.

And secondly on the 4-wheeler part, the opening remarks was speaking about some update. Can you repeat that? And secondly, did you mention anything on the sport motors?

Yes, we did mention in the CMD speech. In force motors, we have got orders for 3 products, which are now under development. That is the next entry we have made. So that was the information shared by CMD in his speech.

So what are those products? And what is the size of business are we looking to do with sports motors? Can you share the details?

No. At this moment, we will not be able to share the type of products. We will share it in due course of time and also the revenue.

Understood. So is it the only customer that we onboarded in 4-wheeler in this quarter or any other customer also?

This is the only customer we onboarded in this quarter.

Got it. And lastly, on the rare earth metal side, are we seeing any challenges to our customers because of unavailability of rare earth metals?

So rare earth eventually, there is some exposure on the EV side only. And EV, as you know, right now, is fairly small component of the industry. So we are not seeing any major impact specifically around it right now. Understood. Specifically around 2-wheeler because our positioning is right now more 2-wheelers. So 2-wheeler is not being impacted right now.

Understood -- and as the Chairman had mentioned in opening remarks as well regarding the good monsoon and along with the festive season we are entering into, do you see any kind of challenges in the terms of consumer sentiment because of the global headwinds currently going on that can affect the positivity coming out of these 2 drivers? Or do you think like demand is pretty decent and we will be able to grow decently in the coming months?

Overall, what we see on the ground, the demand seems to be fairly robust. Festive season is coming on. Monsoon has been good. While you see all the headlines on tariffs and all, we've got upgraded recently by rating agency as India. So I think structurally, we are fine. We are not seeing any challenges on the ground.

The next question is from the line of Rachana from SIL Ventures.

Yes. I have a few questions. First question is in there is some benefit due to the realization improvement due to shift to LED lighting. But just to understand better and clearer what kind of growth has there been in terms of volume?

You'll have to repeat your question. I'm sorry, we're not able to hear it very well.

Am I audible now?

Yes, go ahead.

Again. In our growth trajectory, there has been some benefit due to the realization improvement due to shift to LED lighting. But to understand better, what kind of growth has been in terms of volume?

So LED, as what we always say, LED is 64% of our total sales right now. Now -- and that shift is prominent that will keep growing. And as LED goes, the realization on LED is much more. But at a margin level, we are going to be at similar level, be it LED or non-LED products. So margins have not changed, but sales velocity definitely increases.

Okay. And if you can give color in terms of volume.

Volume growth, what we have said will be translated into our sales growth forecast, which we continue to guide for 15% to 20% sales growth forecast because the industry obviously is not growing at 15%, 20% in volume terms. It is lower. And hence, that volume growth and value growth is both factored in sales. We don't give specific volume.

Okay. My second question on other segment has been flat. So if you could give any color what are the key reasons behind this?

What was the question? Other segments, did you say, just repeat that?

Yes. Our other segments remained flat. So if you could give any color what are the.

Okay. So I think your question is that this is other products other than the lighting, right, the rearview mirrors and the plastic molded parts.

Yes.

You are right. This around 10% is the rearview mirrors and the plastic parts, again, because the value and the realization increase in the automotive lighting is inportionately high. So definitely, there is a change in the percentage. But otherwise, the supply and the percentage of the business is growing.

Okay. My one more question. The other expenses, they have seen a very sharp jump. Are there any one-off or other expenses which are driving this? And what kind of run rate we can expect?

So I don't think there is any sharp jump or something like exceptional. There is some expenses in one quarter may not be in the other quarter. You have to see on a yearly annual basis what is the percentage that is almost remain in line with the normal

If you could further quantify these expenses related to sales or any future investments?

Yes. These are majorly related to the development cost and the sales also, yes.

Okay. And just wanted to know what is our cash balance as of date?

So as at end of quarter, the cash balance is INR 341 crores.

Okay. And any change in our plan we had an ambition of incurring INR 200 crores CapEx over 2 years. So any change is going..

No, the CapEx plan of INR 200 crores over the next 3 years, excluding anything that we do for 4-wheeler remains intact. That's the planned CapEx. 4-wheeler, as we have mentioned in the past, is yet to be finalized. That number could be on top of this will be on top of.

The next question is from the line of Kush Nahar from Electrum PMS.

Yes. So my question was more on the growth side. So since we are facing this geopolitical issue and the magnet issue that was happening, so considering obviously our order book, but this overall macro situation, could you guide us in terms of what kind of growth we are seeing for this particular year, that is FY '26? And over a broader term over the next 3 to 5 years, what type of growth are we looking at?

See, organically, we've always maintained that we will grow at 15% to 20%. That's the benchmark that we have set for ourselves. This does not take into account any positive upside that will come from a significant ramp-up in our 4-wheeler business. and which is why we've not sort of given that number to you. Without that number, we wish we will aspire to grow at 15% to 20%. Even in this quarter, we have grown around that figure, but this is a seasonal quarter. So we will make up for that. So 15% to 20% remains our sales growth rate.

Right, sir. And sir, I think last quarter, we mentioned that we had around RFQs worth INR 700 crores for the 4-wheeler side. So any update on that in terms of conversion to orders or any new RFQs that we received in the past quarter or the current quarter till date?

We continue to work on those RFQs, and they have moved to the next step. The technical studies are on alongside the customer. So we hope to convert a few of them in the coming quarters. We did work on for motor RFQ, which got converted into order for us on which we are working for development.