Ranvir’s Portfolio

IKIO Lighting –

Company overview and Q3 FY 24 highlights –

India’s leading ODM ( Original Designer and Manufacturer ) of LED lighting products sold under various customer brand names. Makes the following –

High end home decorative lightings

Indoor and Outdoor lights

Lighting for Commercial Refrigeration appliances and recreational vehicles

Rotary Switches

Fan regulator assemblies

Switches

USB chargers

Lithium Battries

Solar Panels and ABS pipes for recreational vehicles

Manufacturing facilities –

Haridwar – 42k Sq Ft – LED lights, regulators and switches

Noida – 1 – 80k Sq Ft – Regulators, Switches, Backward integration processes like – tool room, injection moulding, powder coating, CNC machining

Noida – 2 – 112k Sq Ft – Refrigeration LED lighting, LED modules, LED – lighting drivers

Noida – 3 – LED lighting for RVs, Solar panels for RVs, ABS pipes for RVs

Q3 financials –

Sales – 117 vs 115 cr

EBITDA – 26 vs 29 cr ( margins @ 22 vs 25 pc )

PAT – 19 vs 18 cr ( due lower interest outgo and higher other income due utilisation of IPO proceeds )

Company is net debt free with net cash levels @ 200 cr

Q3 Concall highlights –

Lighting business did display some demand weakness in Q3. Demand from export markets continued to be strong – for recreational vehicle products

Planning to launch highly innovative products in the ODM lighting segment in next 3-4 Qtrs. Have hired additional ppl for the same. Hence the employee costs in Q3 are elevated

Have been in talks with a lot of clients in the GCC region. Results likely to be visible by Q2 next FY. Negotiations are in advanced stages. A lot of sampling work has already happened

Sales of RV lighting showing very good pick up in the US mkt

Company expects Q4 to be better than Q3

Sales breakup –

ODM sales – 50 pc of total sales ( this is the business that company does for Signify Lighting – selling Phillips decorative lighting in India )

Display lighting – 32 pc of total sales

Others – 3 pc of sales

Exports – 15 pc of sales

Phase – 1 of new capex is likely to hit optimum capacity utilisation of 60-70 pc in about 24 months from now. At 60-70 pc utilisation, company is able to generate fixed assets turnover of 4-5 times that would amount to 300-350 cr in sales

Dependence on China for procurement of Raw Materials @ 42 pc ( at company level ) – primarily the Diaodes and Semiconductors which are currently not being made by anyone in India – this is also a key business risk

Industry wise slowdown in LED lighting industry in Q3 is perplexing. Even the company could not point out the reasons for it

Expecting Q4 to be better than Q3

Disc : bought recently, biased, not a buy / sell recommendation, not SEBI registered