FOCUS LIGHTING AND FIXTURES (NSE:FOCUS)

(Disclosure: Invested. Not a recommendation).

CMP: ₹ 100.93/share

apologies in advance, this one is a long read- a deep dive into Focus' operations. I am personally invested in the company at an average price of ₹98.7/share.

About the Company

Focus Lighting and Fixtures (FLF) specialises in the manufacturing and trading of LED lights and fixtures. The company’s products are designed and developed by the finest producers in Germany and supported by a team of skilled Indian professionals. FLF caters to a broad spectrum of lighting verticals- including retail, office and home, hospitality, outdoor infrastructure and railways. The company operates across India, the Middle East, and Singapore.

Its products are highly innovative, technologically advanced and adhere to the highest international standards in both functionality and aesthetics. The company sets itself apart by offering a five-year warranty (extendable to eight years) on all its products - far exceeding the standard one to two-year warranty offered by most competitors. This commitment to quality and durability has even led Phillips to acknowledge that they can “match the quality of Focus.” Furthermore, FLF’s lighting solutions provide 30-40% cost savings compared to other LED products. 

Established in 2005 as a retail lighting company, FLF initially operated as a trading firm in partnership with a German company. During its early years, the company identified a significant gap in the Indian market - available lighting products were either highly expensive European imports or low-cost, poor-quality Chinese alternatives. To address this, FLF entered the market by leveraging European technology while manufacturing in India, thus offering products that were on par with or superior to European counterparts but at a significantly lower cost.

Initially, the company focused exclusively on retail lighting. In 2016, it expanded into the home lighting segment using the same approach. In 2022, it further diversified into the railway and outdoor lighting verticals. Looking ahead, in 2025, FLF plans to enter the trade vertical.

FLF operates in a highly niche market, serving buyers with specialised technical requirements. Unlike mass-market lighting brands, FLF primarily caters to professionals such as architects, interior designers and lighting consultants rather than the general public.

The LED Lighting Industry

India remains primarily a trading hub in the lighting sector. Most companies involved in lighting import products from either China or Europe, then either white-label them or sell them under their original brand names. Well-known brands such as Phillips, Havells, Panasonic, Crompton and Bajaj follow this model- outsourcing manufacturing, branding the products as their own and selling them in the market.

In contrast, Focus Lighting and Fixtures (FLF) operates in a niche category, where it imports advanced lighting technologies, enhances their value and manufactures the products in-house. This localised production model helps FLF significantly reduce costs for end users, while maintaining high product quality and innovation.

LED lighting has numerous advantages over conventional lighting and as a result has gained prominence in the Indian market. India is poised to be the largest LED lighting market globally. LED lights are highly efficient, eco-friendly, reliable and yield longer lifespans. Although initial purchase costs of LED lights are higher than traditional lighting, they offer long-term savings due to their lower energy consumption, reduced heat loss, and durability. Most LED products deliver over 50,000 hours of illumination while consuming minimal energy.

The production cost of LED lighting has also been steadily declining over the past decade, primarily due to the falling average selling price (ASP) of key components such as LED chips and other materials. This cost reduction has significantly lowered initial installation costs, driving mass adoption across commercial and residential sectors.

The Indian LED market has experienced substantial growth and rapid adoption over the years, driven by factors such as urbanisation, infrastructure development, technological advancements, and government initiatives like UJALA.

• In 2023, the Indian LED market was valued at ₹28,000 crores.
• By 2028, it is projected to grow by approximately ₹60,000 crores.
• The market is estimated to expand at a CAGR of 24.3% between 2021 and 2026.

These strong growth projections highlight India’s transition towards energy-efficient lighting solutions, solidifying LED technology as the dominant player in the country’s lighting industry.

Verticals

To understand how Focus Lighting and Fixtures (FLF) generates revenue and estimate its potential future valuation, it is essential to analyse its business verticals. The company operates in four primary verticals—retail, home, outdoor infrastructure, and railway lighting—with plans to launch a fifth vertical (trading) in 2025. Let’s dive into each in detail:

Retail Lighting

Between 2005 and 2015, FLF exclusively focused on retail lighting, establishing itself as an industry leader. The company initially catered to brands such as Shoppers Stop, Future Group, Reliance and various jewellery and department stores. Over time, FLF expanded its reach and now works with top global and Indian brands, including:

• Fashion & Retail: Muji, Diesel, Dune, Gas, Kate Spade, Kenneth Cole, BCBGMAXAZRIA, Tata, Uniqlo, Lenskart, Jockey, Apple, Guess, Arvind, and IKEA.
• Automobile Showrooms: BMW, Tata Motors, Audi, Porsche, Citroën, and Mercedes-Benz.

Over the years, FLF has built strong goodwill and deep relationships with its retail clients, allowing it to secure competitive commercial terms and operational advantages. The company provides comprehensive retail lighting solutions, including product supply, planning and design, installation, and project execution monitoring.

Once approved as a retail lighting provider, FLF secures steady business for 2-3 years from each customer. While business continuity is assured, the exact number of projects and order values remain variable. Since FLF’s products are custom-designed for each retailer, customers tend to continue their contracts for subsequent 2-3 year periods. The company operates on a rolling purchase order model, with orders placed 1-2 months in advance and renewed regularly.

At any given time, FLF maintains a strong pipeline of ongoing retail projects, ensuring a consistent flow of business across different quarters.

While it is not customary for lighting suppliers to have exclusive contracts with brands, Focus holds an exclusive agreement as the sole lighting vendor for IKEA in India. The company has also been recently approved for the Middle East, where design work is already underway. Expanding further, FLF is actively pursuing approvals in Southeast Asia and Latin America. In the case of Uniqlo, the company is in discussions to supply lighting products, though Uniqlo’s requirements specify European-manufactured products. To meet this demand, FLF is working with a German OEM that will manufacture the products under the Focus brand name.

FLF has also made a strong impact in the automobile showroom lighting segment. It is estimated that 80% of new showroom lighting business from these brands in India is awarded to FLF. The company completes nearly 900 Tata Motors showrooms annually and estimates that it has executed between 1,800 and 2,000 showrooms over the last two years. In addition to the Indian market, FLF is an approved vendor for Mercedes-Benz and has already begun work in the Middle East and Egypt, with ongoing efforts to secure approvals for the European market.

In the Middle East, FLF has strengthened its market presence by securing large-volume contracts with Centrepoint and Splash, both of the Landmark Group. The company has also recently started working with two additional brands of similar scale, HomeCentre and Home Box. These partnerships are expected to double FLF’s revenue in the region.

A significant milestone for FLF is its strategic partnership with Schweitzer, an Italian firm that is one of the largest suppliers and contractors for supermarkets and hypermarkets in Europe, the USA, Canada and the Middle East. As Schweitzer’s exclusive OEM, FLF is responsible for manufacturing and supplying their lighting solutions worldwide. The company has already secured an initial order worth ₹1.8 crore for one store with gross margins of 40% and expects to generate between ₹ 8-13 crore in the first year of business. Revenue from this partnership is expected to grow to ₹20 crore or more in the following years. Through this collaboration, FLF aims to establish a strong foothold in Europe over the next two to three years.

Looking ahead, the retail lighting vertical presents significant opportunities for growth. FLF is rapidly expanding its presence in the Middle East and is actively seeking approvals for entry into Southeast Asia and Europe, which will be crucial for long-term revenue growth. While retailers in India may open only three to four stores annually, contributing ₹2 to 4 crore in revenue per retailer, internationally they could generate as much as ₹50 crore per retailer. 

In 2023, the company introduced a groundbreaking patented lighting technology that allows retailers to reduce their lighting costs by 30-40%. This innovation enables retailers to achieve multiple lighting effects using a single fixture, replacing the need for four separate lighting fixtures. The initial rollout of this technology in India has been met with a positive reception, and FLF plans to expand its availability to the Middle East and Europe in the near future.

The retail lighting vertical remains one of FLF’s mainstay and most promising business segments. With ongoing global expansion, strong partnerships in both fashion and automobile retail and the introduction of cost-saving proprietary technology, FLF is well-positioned to experience significant growth in this sector over the next two to three years.