Two hidden auto-lighting stocks that could shine in 2026

While the spotlight remains on the big names, such as Maruti and Tata, a silent transformation is occurring deeper in the supply chain—one that retail investors rarely notice.

Car lighting has evolved far beyond basic halogen headlamps. Today’s buyers want sharper styling, better visibility, and premium tech, pushing the industry toward LED, matrix, and even OLED systems. As a result, LED now powers nearly 60–70% of new cars, and this shift is accelerating every year.

With that in mind, here are two Indian auto-ancillary companies quietly benefiting from this structural upgrade—and worth adding to your watchlist.

#1 Lumax Industries

Lumax Industries, a flagship company of Lumax Group, is India’s most experienced player in the automotive lighting industry.

The company has over 4 decades of strong partnership with Stanley Electric Co. Limited, Japan, a world leader in vehicle lighting and illumination products.

It's particularly strong in the passenger vehicle (PV) segment in India.

The company's product portfolio includes automotive lighting systems such as headlamps, tail lamps, and other sundry auxiliary lamps. It's the leading supplier of lighting solutions for the PV segment and the third largest in the 2W segment.

Further, Lumax Industries launched lighting systems for Hero, Suzuki, Maruti Suzuki, and Tata Motors. The LED segment made up 84% of the order book and accounted for 61% of revenue in Q1FY26, up from 45% in Q1FY25.

With a strong Tier 1 relationship with all major OEMs in India, the company has firmly established itself as a trusted partner in the automotive lighting space.

With a robust order book of ₹2000 crore, continued focus on innovation, and deep customer trust, the management remains confident in the company’s ability to sustain growth and create long-term value for all stakeholders in FY26 and beyond.

Over the past three years, too, the company has delivered solid financial performance.

From FY23 to FY25, its revenue has grown at a CAGR of around 21.6%, while profit has expanded at a strong CAGR of about 16.4%.

Its three-year average ROE and ROCE stand at 17.4% and 26.1%, respectively.

#2 Fiem Industries

Fiem Industries stands out as a top player in the manufacturing of automotive lighting and signalling gear, rear-view mirrors, and various plastic and sheet metal components.

They create both LED and traditional headlamps, tail lamps, indicators, and interior lights for all types of vehicles—be it two, three, or four wheels.

The company also produces essential parts like bank angle sensors, canisters, prismatic mirrors, and moulded plastic pieces. On top of that, they provide LED lighting solutions for both indoor and outdoor settings, along with display panels and systems for passenger information.

Fiem Industries boasts a robust global footprint, with operations in India, Italy, Japan, and Hong Kong. This is backed by cutting-edge R&D and design centres located in Gurugram, Chinchwad, Hosur, Italy, Japan, and Hong Kong.

Additionally, Fiem has established a joint venture in Hong Kong and has entered into technical assistance agreements with Toyodenso and Asian Industry of Japan, enhancing its technological prowess and fostering global partnerships.

Its joint venture in Hong Kong and technical collaborations with Toyodenso and Asian Industry of Japan further enhance its technological strength and global partnerships.

The company in Q1 FY26 cited that LED technology now accounts for 59.3% of its lighting revenues, with further growth anticipated as new projects will be fully LED-based.

Additionally, management highlighted that Fiem is open to exploring inorganic opportunities, particularly in lighting and electronics, if the right prospects come along.

Over the past three years, the company has delivered solid financial performance.

From FY23 to FY25, its revenue has grown at a CAGR of around 13%, while profit has expanded at a strong CAGR of about 20%.

Its three-year average ROE and ROCE stand at 18.9% and 26%, respectively.

Should you consider investing in auto lighting stocks?

In India, the auto lighting market is estimated to be worth $1.73–1.89 billion in 2025, with expectations of expanding to $2.31 billion by 2030.

Key growth drivers include rising LED penetration in new passenger vehicles, currently at 60–70%, increasing lighting demand for EVs by 15–20% year-on-year, stricter safety regulations (AIS norms) mandating better lighting, and OEMs localising production to reduce imports from China and Japan.

However, investing in the auto lighting space comes with certain challenges.

The sector is highly dependent on OEM demand cycles, which can be volatile.

High competition from global and local players, rapid technological changes, and sensitivity to raw material price fluctuations, such as metals and electronics components, can affect profitability.

Additionally, regulatory shifts or delays in adoption of new standards could impact growth for suppliers.

Investors should evaluate the company's fundamentals, corporate governance, and valuations of the stock as key factors when conducting due diligence before making investment decisions.

Happy Investing.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such.

This article is syndicated from Equitymaster.com