Aditya Infotech shares can rally up to 27%? Why Motilal Oswal initiated coverage on the stock

Domestic brokerage firm Motilal Oswal initiated coverage on video security and surveillance products provider Aditya Infotech with a Buy rating and a target price of Rs 4,200, implying an upside of 27%. The brokerage highlighted the company’s strong positioning to benefit from rising surveillance penetration through its CP Plus brand, which is the world’s third-largest CCTV manufacturer.

Motilal Oswal expects Aditya Infotech to deliver a stellar revenue growth of 44%, with EBITDA at 58% and the profit after tax growth of 64% over FY26-FY28, owing to strong industry tailwinds and expansion in market share.

The company’s share is likely to grow due to its strong brand image and a slowdown in competitive intensity post-standardisation testing and quality certificate (STQC) norms. The company’s EBITDA margin is also expected to improve.


Aditya Infotech is well-positioned to benefit from a demand surge in the video surveillance market, according to Motilal Oswal. The market is valued at Rs 10,600 crore as of FY25 and is expected to grow to 227b by FY30E, driven by the imminent need to enhance security. Further, the implementation of STQC norms for CCTVs has unlocked a humongous growth opportunity.

Hence, market share is projected to expand from 44% to over 58%+ by FY28, as its revenue is likely to post a 44% CAGR over FY26-28E.

This represents a notable outperformance vs. the industry, which is likely to clock a 16-18% CAGR over the same period. This growth will be supported by strong volume and improved realisations, driven by the expected price hikes and a shift in the product mix towards higher-value offerings, the brokerage said in its note.

Multiple margin levers are at play, as the company is backwards integrating the manufacturing process by increasing lens capacity from 0.3mpcs/month to 1mpcs/month by FY28E, forming a JV for cables, and setting up a plant for in-house plastic and metal components (30m pcs/annum capacity will come up in two phases).

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There is also a shift towards higher-margin Internet Protocol (IP) cameras over analogue, and reduced reliance on Dahua (a China-based CCTV company). To strengthen the security framework of video surveillance systems, the Ministry of Electronics and Information Technology (MeitY) has prescribed Essential Requirements applicable to CCTV cameras, including analog, IP-based, and speed dome variants.

Compliance with these requirements is mandatory, with certification granted through STQC-approved laboratories.

Hikvision and Dahua were two prominent suppliers in India. Following the mandatory STQC certification, the major product offerings of these companies have become non-compliant owing to the components, which are largely sourced from China. Hence, neither of these companies has yet received the certification, and according to recent articles, it appears unlikely that these companies will receive approvals in the near future.

Owing to this, the brokerage expects Aditya Infotech’s operating margin to structurally improve to ~15%/16.1% by FY27E/FY28E from 13.4% in FY26.

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