Aditya Infotech rebounds on fundraise plans; analysts see up to 20% upside

ET Intelligence Group: Shares of Aditya Infotech, a security and surveillance products manufacturer, have recovered 4% in the past two trading sessions on the news of fresh equity fund raising to expand capacity. It has reduced the fall in the share price to 11% since August 12 when the company declared a sequentially weaker June quarter performance.

Elevated prices of electronic components affected the company's profitability in the June quarter on a sequential basis. Though the company has retained the guidance for operating margin before depreciation and amortisation (Ebitda margin) at 14-15% for FY27, it will be a tough task given the import share of around 60% in the sourcing mix.

Aditya Infotech's portfolio consists of cameras, video recorders, biometric and access control products, and mobile surveillance solutions among others. A major growth trigger for the company was the Standardisation Testing and Quality Certification (STQC) norms, which came into effect in April 2025, affecting the sale of products from Chinese companies in the internet protocol (IP) driven surveillance systems thereby increasing the addressable market opportunity for Indian manufacturers. According to reports, the market share of large, global companies which failed to comply with the norms, dropped to over 16% in FY26 from 27% in the previous year.

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Aditya's financial performance reflects the benefit of the new regulatory norms. In FY26, revenue grew by 35.6% to ₹4,220.8 crore while Ebitda grew by 124% to ₹579 crore and net profit shot up by 165.7% to ₹492.7 crore. The strong growth percolated to its stock performance, with 128% gain in 2026 so far. Its market cap has shot up to ₹41,124 crore as on Friday from ₹7,900 crore at the time of its initial public offering (IPO) last July while the price-earnings multiple has expanded to 86 from 68 during the period. Such a rapid jump in the stock and valuations has prompted investors to track the company's performance on a sequential basis. As a result, the stock fell after it reported nearly 16% fall in net profit and 330 basis point contraction in Ebitda margin for June quarter against the previous quarter.

In response to rising input costs, the company raised product prices by 15-20%, which was lower than the FY27 indicative raise of 25%. Its efforts to source components locally would take two-three quarters to affect the financials meaningfully.

The latest qualified institutional placement worth ₹1,500 crore to increase capacity looks timely since the current capacity utilisation is 85-90% thereby improving revenue visibility amid sustained demand scenario. Analysts have a 'buy' call on the stock with a 10-20% upside from Friday's closing price of ₹3,476.3.