Skip to content

    IKIO Tech

    IKIO
    Consumer Durables·10 Feb 2025
    Management Summary

    IKIO Lighting Limited reported mixed results for Q3 and 9M FY25, with revenue growth driven by diversification but profitability impacted by ODM slowdown, front-loaded expenses, and higher depreciation. The company is actively expanding into new geographies and product categories, including hearables and wearables, and is progressing with new facility construction. FY25 revenue guidance has been revised downwards to 12-14%.

    Highlights

    5

    • 9M FY25 Revenue grew 9% year-on-year to ₹374 crores.

    • Q3 FY25 Revenue grew 4% year-on-year to ₹121 crores.

    • Diversification efforts led to outside India contribution of 21% in 9M FY25.

    • Entered into a joint venture agreement with AG Investments to accelerate Middle East business growth.

    • Royalux LLC secured a commitment of USD 8 million in business over the next six months.

    Concerns

    5

    • Q3 FY25 Revenue declined 3% quarter-on-quarter.

    • 9M FY25 EBITDA declined 28.9% YoY to ₹54 crores.

    • 9M FY25 PAT declined 35.3% YoY to ₹33 crores.

    • Q3 FY25 EBITDA margin was impacted, standing at 12%.

    • FY25 revenue guidance revised downwards to 12-14% from an earlier 20-25% due to ODM slowdown.

    What Changed2

    vs Q4 FY25

    Guidance items2 → 5 (+3)Risks discussed6 → 4 (-2)
    Key financials

    Metrics

    6

    Periods

    2

    Q3 FY25

    3
    • Revenue
      ₹121 Cr
      YoY+4%QoQ-3%
    • EBITDA Margin
      12%
    • PAT Margin
      6.4%
      YoY-37.9%QoQ-60.5%

    9M FY25

    3
    • Revenue
      ₹374 Cr
      YoY+9%
    • EBITDA
      ₹54 Cr
      YoY-28.9%
    • PAT
      ₹33 Cr
      YoY-35.3%

    Capital allocation

    4
    medium confidence
    CategoryHeadline
    Capex

    Capex disclosed

    Debt

    Debt disclosed

    M&A

    AG Investments

    joint venture · signed

    Liquidity

    Cash ₹14.8 crores

    Cash PAT stood healthy at ₹14.8 crores in Q3 FY25 and ₹51.3 crores in 9M FY25.

    Guidance & targets

    5
    CategoryTargetPriority
    Revenue
    Revenue Growth
    12%-14%
    		High
    Revenue
    Royalux LLC Business Commitment
    USD 8 million
    		High
    Profitability
    EBITDA Margin
    around 14%
    		High
    Capacity
    Block II Civil Construction Completion
    March 2025
    		High
    Capacity
    Block II Commissioning
    another couple of quarters
    		Medium

    FY26 Revenue and EBITDA Guidance

    next earnings call (Q4 FY25)
    CurrentFY25 revenue guidance 12-14%, EBITDA margin ~14%
    TargetNew comprehensive guidance for FY26

    Why it matters

    To assess management's outlook and targets for the next financial year, reflecting the impact of current strategic initiatives.

    So, once you know the final budget is ready, which will be by the next month, we will definitely give some guidance, proper guidance in terms of EBITDA and revenue growth in the next probably in the next earnings call.

    How to verify

    guidance_and_targets

    Risks & concerns

    4
    RiskSeverity

    Slowdown in ODM Business

    The ODM business experienced a slowdown, impacting overall revenue growth and contributing to margin pressure. — Management acknowledged

    high

    Margin Compression

    EBITDA and PAT margins were impacted by lower ODM revenue, front-loading of expenses for new initiatives, and higher depreciation from new facilities. — Management acknowledged

    high

    New Business Ramp-up Time

    New verticals and customer relationships require time to mature and generate significant revenue, leading to a lag in offsetting ODM weakness. — Management acknowledged

    medium

    Strategic Low-Margin Orders

    Taking low-margin orders in new segments (hearables/wearables) to onboard clients impacts short-term profitability but is expected to yield long-term benefits. — Management acknowledged

    medium

    Q&A highlights

    7

    “Actually, the other expenses have increased on account of, I will throw some light on how our US operations are going on as of now. So, the subsidiary that we have in the US, which is Royalux LLC, so there we have two parts. One is the product that we are supplying to various categories, and one is the subcontracting. So, recently we have entered a new market in which we are working with the ESCOs. So, with those ESCOs, we are supplying products and there is part subcontracting as well. So, what is happening is that the subcontracting expenses are basically coming in the other expenses.”

    Clarified the reason for increased operating expenses and confirmed that new US business contributes healthy PAT margins despite higher costs.

    asked by Vipul Goel

    2 min read6 chapters

    Detailed Narrative

    01

    Q3 & 9M FY25 Financial Performance

    IKIO Lighting Limited reported a 9% year-on-year revenue growth for 9M FY25, reaching ₹374 crores, primarily driven by product display and energy solutions. For Q3 FY25, revenue increased 4% year-on-year to ₹121 crores but saw a 3% quarter-on-quarter decline. Profitability was significantly impacted, with 9M FY25 EBITDA decreasing by 28.9% to ₹54 crores and PAT falling by 35.3% to ₹33 crores. The Q3 FY25 EBITDA margin stood at 12%, and PAT was ₹8 crores, with PAT margins declining from 16.2% QoQ to 6.4%.

    02

    Strategic Diversification and New Market Expansion

    The company is aggressively pursuing diversification, with outside India contribution reaching 21% in 9M FY25. Key initiatives include selection under the PLI scheme for white goods (LEDs) and entry into the Gulf market through a joint venture with AG Investments, aimed at leveraging their network for broader customer access. In the US, Royalux LLC, a step-down subsidiary, secured an USD 8 million business commitment over the next six months, expanding beyond the RV segment into industrial and solar products.

    03

    Capacity Expansion and IPO Fund Utilization

    IKIO Lighting is on track with its capacity expansion plans. Block I of its 2 lakh square feet facility was commercialized in May 2024. Civil construction for Block II, another 2 lakh square feet, is underway and expected to be completed by March 2025, with commissioning anticipated in the subsequent quarters. The company has deployed approximately 68% of its IPO funds, with debt repayment completed immediately after the IPO.

    04

    Profitability Challenges and Strategic Adjustments

    The decline in profitability was attributed to several factors, including a slowdown in the ODM segment, front-loading of expenses for new facilities and product development, and higher depreciation on new assets. Management also highlighted a strategic decision to onboard new clients in the hearables and wearables segment by accepting orders at 'very bleak margins' in Q3 FY25, with the expectation of securing larger, more profitable orders in the future.

    05

    Revised FY25 Guidance and Future Outlook

    Due to the slowdown in the ODM business and a subdued overall LED lighting market in India, the company has revised its FY25 revenue growth guidance downwards to 12-14% from an earlier target of 20-25%. The EBITDA margin for FY25 is expected to remain around 14%. Management expressed optimism for the next financial year, anticipating improved performance as new relationships mature and diversified verticals begin to contribute significantly to revenue.

    06

    ODM Business Shift and Product Portfolio Expansion

    The ODM business's revenue contribution decreased from 55% in 9M FY24 to 45% in 9M FY25, reflecting the company's strategic shift towards diversification. IKIO is expanding its product portfolio beyond lighting to include hearables, wearables, PCB assemblies, and automotive components. This broader offering led to the decision to remove 'Lighting' from the company's name, aiming for better customer understanding of its diverse capabilities.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.