IKIO lighting shines: Anand Rathi’s ‘buy’ call sparks 3% surge, foresees brilliant 22% upside

IKIO Lighting dazzles with a 3% stock surge following Anand Rathi’s ‘Buy’ recommendation, projecting a luminous 22% upside potential.

IKIO Lighting’s stock price increased by more than 3% on Friday. On the Bombay Stock Exchange (BSE), the stock increased by as much as 3.47% to ₹329.00 per share.

Shares of IKIO Lighting are still trading 16% below their market value on the stock exchanges.

On June 16, 2023, IKIO Lighting shares debuted on the stock market. The stock was listed at ₹391 on the BSE, which was 37.19% more than the ₹285 issue price per share. The NSE listed IKIO Lighting shares at ₹392.5.

IKIO Lighting’s shares saw a rise in a turbulent market journey, peaking at ₹477.15 on June 23, 2023, before a difficult decline to ₹305 on January 3, 2024. But Anand Rathi’s recent start of coverage has given rise to hope and set up the stock for a possible recovery.

With a strong ‘Buy’ recommendation for IKIO Lighting, based on a solid 36x of FY25E earnings, reputable brokerage firm Anand Rathi has entered the fray. The company has set an aggressive target price of ₹390 per share, which represents a significant 22% increase from the previous Thursday’s closing price. Anand Rathi is confident in the company’s future trajectory, as evidenced by this 12-month projection.

IKIO’s recent success can be attributed to its calculated growth in export revenue, which was driven by both low-base and strategic customer acquisitions. The company’s upward trajectory was largely attributed to its strategic introduction of a new recreational vehicle product line, which allowed it to strategically expand its export division.

IKIO’s continuous global expansion is highlighted in Anand Rathi’s report, with particular attention paid to the markets in North America, Europe, and Southeast Asia. These areas, which are distinguished by a strong market for high-end lighting products, are ideal for IKIO’s OEM offerings and the introduction of cutting-edge goods. The brokerage firm feels that IKIO is well-positioned for future investments in an expanded product line in the upcoming years due to its established customer base and sound financial standing.

The report showcases the excellent financial performance of IKIO Lighting, with revenue growing at a rate of 18% CAGR and EBITDA growing at an astounding 27% CAGR between FY20 and FY23. Anand Rathi credits a combination of improved brand awareness, operational effectiveness, and a balanced product mix for this success. The company’s financial position has strengthened as a result of its strategic decision to become debt-free after listing, allowing it to lower its working capital requirements in FY23.

Between FY20 and FY23, IKIO’s EBITDA margin increased significantly from 17% to 22%, demonstrating its competitive strength and ability to withstand setbacks. In the future, IKIO intends to use excess capital for backward integration, new product lines, and capacity expansion. The company’s global expansion strategy continues to heavily rely on its efforts abroad, especially in the U.S.

Anand Rathi sees a bright future for IKIO, predicting revenue, EBITDA, and PAT to grow at CAGRs of 22%, 27%, and 29% over the FY23–25E period, respectively. The brokerage firm’s optimistic outlook is a reflection of its belief that the company can leverage its customer base, financial stability, and operational efficiency to achieve long-term growth.

Anand Rathi’s endorsement has positively affected IKIO Lighting shares, which are now trading 2.36% higher at ₹325.45 apiece on the BSE as of 11:25 am. The market is waiting to find out if IKIO can light the way to a better, more prosperous future.

Anand Rathi’s upbeat analysis combined with IKIO Lighting’s journey through ups and downs presents a picture of a business that is well-positioned for the future. Using its strategic initiatives, financial resilience, and global expansion efforts, IKIO has established itself as a significant player in the lighting industry, poised to leverage emerging opportunities and blaze a trail to long-term prosperity.