While most market attention remains fixed on major car manufacturers, a significant and profitable transformation is unfolding deeper within the automotive supply chain. According to a recent analysis by Equitymaster, the shift from traditional halogen lighting to advanced LED, matrix, and OLED systems in vehicles is creating substantial opportunities for specialised component makers. For investors looking beyond original equipment manufacturers (OEMs) like Maruti and Tata Motors, two Indian auto-lighting companies are emerging as compelling prospects for the coming years.
The Silent Revolution in Car Lighting
The humble car headlamp has undergone a technological metamorphosis. Driven by consumer demand for sharper styling, superior visibility, and premium features, the automotive industry is rapidly adopting advanced lighting systems. LED technology now powers an estimated 60–70% of all new cars sold in India, and this adoption rate is accelerating annually. This structural shift is fuelling growth for ancillaries that manufacture these sophisticated lighting solutions, often away from the limelight enjoyed by the carmakers themselves.
Lumax Industries: A Leader with Deep Roots
First on the radar is Lumax Industries, the flagship of the Lumax Group and one of India's most experienced players in automotive lighting. The company benefits from a strategic partnership spanning over four decades with Japan's Stanley Electric Co. Limited, a global leader in vehicle illumination.
Lumax's product portfolio includes headlamps, tail lamps, and various auxiliary lamps. It holds the position of the leading lighting supplier for the passenger vehicle (PV) segment and ranks third in the two-wheeler (2W) segment. The company supplies key OEMs including Hero, Suzuki, Maruti Suzuki, and Tata Motors.
The company's financials and order book reflect the industry's LED transition. In the first quarter of fiscal year 2026 (Q1 FY26), the LED segment constituted a dominant 84% of its order book and contributed 61% of its revenue, a significant jump from 45% in Q1 FY25. With a robust order book valued at ₹2000 crore and Tier-1 relationships with all major Indian OEMs, Lumax is well-positioned for sustained growth.
From a financial performance perspective, the company has delivered strong results over the past three years (FY23 to FY25), with revenue growing at a compound annual growth rate (CAGR) of around 21.6% and profit expanding at a CAGR of approximately 16.4%. Its three-year average return on equity (ROE) and return on capital employed (ROCE) stand at 17.4% and 26.1%, respectively.
Fiem Industries: A Diversified Player with Global Reach
The second company highlighted is Fiem Industries, a top manufacturer of automotive lighting, signalling equipment, rear-view mirrors, and various plastic and sheet metal components. It produces both LED and conventional lighting for all vehicle categories—two-wheelers, three-wheelers, and four-wheelers.
Fiem boasts an impressive global footprint, with operations and state-of-the-art research & development centres in India, Italy, Japan, and Hong Kong. The company has strengthened its technological capabilities through a joint venture in Hong Kong and technical assistance agreements with Japan's Toyodenso and Asian Industry.
In Q1 FY26, Fiem reported that LED technology accounted for 59.3% of its lighting revenues, with management anticipating further growth as all new projects will be fully LED-based. The company is also open to exploring inorganic growth opportunities in lighting and electronics.
Financially, Fiem has shown consistent performance. Between FY23 and FY25, its revenue grew at a CAGR of about 13%, while profit expanded at a stronger CAGR of roughly 20%. Its three-year average ROE and ROCE are healthy at 18.9% and 26%, respectively.
Investment Potential and Inherent Risks
The Indian auto lighting market presents a sizable opportunity, estimated to be worth $1.73–1.89 billion in 2025 and projected to expand to $2.31 billion by 2030. Key growth drivers include the rising penetration of LEDs in new vehicles, a 15–20% year-on-year increase in lighting demand for electric vehicles (EVs), stricter government safety regulations (AIS norms), and a push by OEMs to localise production and reduce imports.
However, potential investors must also consider the sector's challenges. The industry is cyclical and heavily dependent on OEM demand, which can be volatile. It also faces high competition, rapid technological obsolescence, and sensitivity to fluctuations in raw material prices for metals and electronic components. Regulatory changes or delays in adopting new standards could also impact supplier growth.
Therefore, thorough due diligence focusing on a company's fundamentals, corporate governance, and current stock valuations remains crucial before making any investment decision. The analysis concludes that while Lumax Industries and Fiem Industries are well-placed to benefit from a long-term industry trend, they are not devoid of risks typical to the auto-ancillary space.
Disclaimer: This article is for informational purposes only. It is not a stock recommendation and should not be treated as such. The article is syndicated from Equitymaster.com.
