For over 120 years, Signify Innovations (Previously Philips Lighting) has been at the forefront of innovation.They use the transformative power of light to make people more comfortable and productive– providing high-quality light in public places, professional spaces, and at home. They use light to make people feel happier and safer – light that entertains, inspires, and informs, makes cities more livable, and satisfies people’s daily needs.

Philips is taking lighting beyond illumination with connected lighting innovations for the home, retail environments, offices, cities, and more. Philips pioneered the development of high-quality, energy-efficient LED lighting.



They are now taking lighting into a fully digital world that connects people, places, and devices. They foresee a day, in the near future, when all their lamps, luminaires, and system devices will be digital and network-ready. Using a combination of patented technologies and open standards, their lighting innovations will connect seamlessly to benefit the customers and the environment.

Philips Products

(i) Hue Personal Wireless Lighting System: Everyone must be wondering what is Hue Wireless Lighting System. This is an innovative product designed by Phillips in which you can control the light in the room with the beat of your music, Isn't it a wonderful concept? Easily synchronize your Philips Hue lights with your favorite music. Create the perfect atmosphere with light that matches your favorite songs.

(ii) Led Lights: Everyone these days is talking about the LEDs. So what is that which separates LEDs from conventional bulbs?

1. Create a warm, cozy atmosphere with LED lighting.

2. Longer lifetime and uses up to 90% less energy than traditional sources.

3. Enjoy perfect light quality, instant-on with no warm-up time. The Phillips is Leader in when it comes to LED Lighting. Click here for more information.

(iii) Luminary and Bulbs: A perfect luminary can help light up every room. From wall lamps to ceiling pendants provide the perfect light for your home. Decorative light bulbs help in enhancing your home and adding a perfect light to it. These lighting fixtures enhance the look of your home and add a unique lighting mood. Click here for more information.

Business Performance Signify Innovations India Unlisted Shares for FY18-19:

(i) The lighting industry continued its transformation towards LED lighting, owing to declining LED prices and favorable government initiatives. There has been an increase in the adoption of LED lighting across homes, commercial, and government projects across the country in the past year. The government has also implemented several streetlighting projects during the year, installing LED streetlights that are more energy-efficient and offer a higher light output.There is an increase in the total market share of LED lights among all available conventional lighting methods, to 82% from 73%, in 2018-19.

(ii) However, in 2018-19, the lighting industry also witnessed an increased influx of low cost and spurious lighting products that don’t follow safety regulations specified by the government. The market of such players has grown by 5.6% in the market this year.

(iii) Due to the phase-out of CFL-I lamps in the Indian market and rapid shift to LED, the management has closed down it's Mohali CFL plant and is in the process of finding the buyers for land and remaining assets.

Business Highlights of Signify Innovations India Unlisted Shares for FY19-20

(i). In FY19-20, the LED products have generated 83% of the revenue under lightning business which is almost same as that of last year.

(ii). In FY19-20, the company has launched 70 new exclusive Philips Smart light hubs with increasing urbanization & focus towards Home connected lighting solutions.

(iii). About 92% of what company sell in India is made in India and this de-risks the production from external factors.

(iv). The company has manufacturing unit in Vadodara which exports conventional and LED lamps to 29 countries across the world, and is also one of the most cost competitive conventional lamp manufacturing facilities in the world for Signify.

(v). The company has R&D lab in Noida. In FY19-20, the company has designed products such as - Philips T-beamer, Philips T-bulb to name few.

(vi). The Professional lighting solutions witnessed a de-growth of 28%, owing to reduced EESL tenders, limited government projects post the general elections in 2019, & economic slowdown especially in Infrastructure category. However, despite this, company got prestigious projects such as; a) Motera stadium in Ahmedabad, the world’s largest cricket stadium. b) Illuminating the iconic Qutub Minar in the capital city New Delhi c) Illuminating the Howrah Bridge in Kolkata.

Key Takeaways of Signify Innovations India Unlisted Shares for FY20-21

1. The company reported a profit after tax (PAT) of Rs 267.6 crore in the financial year 2020-21 as against a profit of Rs 181.7 crore in the financial year 2019-20. PAT/Revenue ratio stood at 10.7%, which was 6.3% in the previous year.

2. The company reported a revenue of Rs 2515 crore in the financial year 2020-21 as against a revenue of Rs 2919 crore in the financial year 2019-20.

3. The company registered a degrowth of 14% in the latest fiscal, against a degrowth of 19% in the previous fiscal. The company attributed decline in professional lighting and government business, slow down in infrastructure spending, liquidity crunch in Indian markets due to defaults by few NBFCs, price erosions due to competitiveness in market and the predominantly due to the impact of Covid-19 outbreak and consequent lockdowns across India for the decline.

4. The impact due to Covid-19 was wide-spread and impacted lives, livelihood and totally disrupted consumer markets and supply chains. The demand of company products was severely affected due to the lockdown.

5. The Company has not made any major fund-based borrowings in this year and has managed working capital requirements from internal cash generation. Capital expenditure during the year was Rs 20.5 crore against a Capex of Rs 121.9 crore in the previous year and investment in new plant and machinery and IT equipment’s etc

6. Financial year 2021 was a challenging year for the company business. The COVID-19 pandemic spread across all parts of the country and many states remained under lockdown for several months.

7. The LED transformation continued with LED products generating 79% of the company's lighting business, reflecting that the country is close to its peak LED conversion rates, owing to easy availability and lower prices of LED lighting products.

8. The professional lighting solutions of the company witnessed a de-growth of 25.4%, owing to reduced EESL tenders, delayed government and commercial projects, as most offices remained closed due to the lockdown, resulting in limited demand for lighting solutions.

Signify Innovations India Unlisted Shares Business Performance in FY21-22

1. In FY21-22, Signify continued to lead the LED transformation in the country by launching innovative products during the year, such as the Philips HexaStyle downlight, India’s first hexagon-shaped LED downlight and Philips Motion Sensor T-Bulb.

2. Signify has also entered the fans category for the first time with the EcoLink brand, expanding the  portfolio beyond lighting and switches.

3. The home decorative lighting business also registered a healthy growth on account of new home construction picking up across India. To tap into this growing opportunity, we expanded our Philips Smart Light Hubs network to 225 stores across the country and added our switches and 3D printed luminaires portfolio in these stores.

Signify Innovations India Unlisted Shares Business Performance in FY22-23

A) Product Innovation and Diversification

1. Philips FullGlow LED Bulb: The launch of India’s first full glass LED bulb indicates a focus on innovation and capturing market share through differentiated products.

2. Smart Wi-Fi lighting range: The expansion in this segment shows a commitment to smart home technology, aiming to capture the growing market for smart lighting solutions.

3. EcoLink fans: The introduction of silent and decorative fans under the EcoLink portfolio indicates diversification in the product range.

B) Distribution and Market Penetration

With an expansion to 274 stores across the country, Philips is focusing on improving its distribution strength. This is particularly timely as new home construction is picking up across India.

C) Business Segments and Contracts

1. Professional Lighting Business: The company has won contracts for key infrastructure projects, including Atal Bridge, Ripon Building, and Eden Garden Cricket Stadium. This indicates a strong foothold in the B2B lighting market.

2. Private Sector Projects: Collaboration with tech giants like TCS, Qualcomm, and Infosys shows a diversified client base and adds to the business credibility.

D) Financial Metrics in Fy23 vs 22

1. Total Income: INR 3129 Cr vs INR 2824

2. PAT (Profit After Tax): INR 353 Cr vs INR 231

3. EPS (Earnings Per Share): 46 vs 40

4. Domestic vs International: A significant portion of the revenue (INR 2560 Cr) comes from the domestic market, while INR 546 Cr comes from outside India.

5. Growth: The company registered 11.2% growth in top-line and 12% growth in profitability YoY.

6. P/E Ratio: At a P/E of 32x and an EPS of 46, the stock appears to be fully priced, given the modest growth rates.

E) Market Trends and Strategy

1. LED Transformation: LED products now make up 86% of total sales revenue, showing a strategic shift towards sustainable and energy-efficient products.

2. Conventional Lamps: Despite a 9.5% de-growth, Philips remains a market leader in conventional lamps, both domestically and in exports.

3. Consumer Lighting: The consumer lighting business grew by 6.7%, impacted by negative consumer sentiment.

4. Professional Lighting Growth: A robust 23.4% growth was recorded, driven by increased government spending on infrastructure.

F) Market Valuation of Signify Lighting 

1. Unlisted Market Price of Signify: INR 1500 per share

2. P/E Ratio: At 32x, considering the EPS of 46, the company appears fully priced, especially given that significant growth isn't evident.

Summary

Overall, Philips Lighting seems to be on a stable growth path with a focus on innovation and market diversification. However, the valuation in the unlisted market seems to be on the higher side, considering the growth rates.

The company has done well in the B2B segment and has been able to secure key government and private contracts, which bodes well for future growth prospects

Key Takeaways from Signify Unlisted Shars Annual Report 2024

Understand Business of Signify

Signify is a leading provider of lighting solutions, serving both the retail and professional segments. They offer a wide range of lighting products for homes and larger-scale projects, as well as engineering services through their Innovation Labs located in Noida and Bangalore, and Cooper Lighting operations in Pune.

The retail segment, which includes lighting products commonly used in households, faces relatively low demand due to the long lifespan of LED lights. Once purchased, these LEDs last for years, resulting in fewer replacement sales. Additionally, sales in this segment are closely tied to the growth of the real estate market, where competition in the LED space is intense.

In contrast, the professional segment has shown strong growth, particularly in FY24, where the company achieved double-digit growth. This segment includes large-scale projects such as providing lighting for cricket stadiums, the Ram Mandir, and the Rashtrapati Bhavan.

Signify's innovative approach also extends to their Interact IoT platform, which enables connected LED lighting systems and embedded sensor networks to collect data, deliver insights, and offer new services. Furthermore, this year, the company expanded its product range by launching a series of BLDC fans, promising superior performance and energy efficiency.

Business Analysis of FY24

1. Transition to LED Technology: The lighting industry continues to shift from conventional to energy-efficient LED technology.

2. Challenges in 2023-24: The sector faced several challenges, including value destruction due to price reductions, increased competition from imports in the unorganized sector, and new market entrants, which impacted revenue growth despite an increase in volumes. This is why Signify's revenue in FY24 stood at INR 3,069 crore, compared to INR 3,106 crore in FY23 but saw a 3% improvement in profitability year on year.

3. Adoption of Driver on Board Technology: The adoption of cheaper Driver on Board technology made LED products more affordable, contributing to volume growth. This will going forward will increase the sales.

4. Muted Replacement Demand: Replacement demand for lamps was muted due to the longer life of LED products, but new light points saw strong volume growth, driven by real estate and infrastructure development.

5. LED Sales Dominance: LED products now account for 87% of the company's total product sales, reflecting the success of the LED transformation.

6. Growth in Decorative Home Lighting: The decorative home lighting business registered healthy growth, driven by trends in premiumization and customization.

7. Expansion of Philips Smart Light Hubs: The company expanded its Philips Smart Light Hubs network to 286 cities, tapping into growing opportunities in the premium and connected lighting segments.

8. Growth in Professional Lighting Business: The management of Signify reported that the professional lighting solutions segment continues to deliver robust double-digit growth. This year, they successfully completed several prestigious projects, including the illumination of the Bandra-Worli Sea Link, solar street lighting in Ayodhya, and the Ram Mandir. Additionally, they contributed to various sports stadiums and tunnels connecting remote areas of India.

Financial Analysis of Signify for Fy24

1. Revenue Decline: The company's revenue decreased from ₹3,106 crore in FY23 to ₹3,069 crore in FY24. However, the service division experienced growth, rising from ₹34 crore in FY23 to ₹41 crore in FY24.

2. Profit After Tax (PAT): PAT increased slightly from ₹266 crore in FY23 to ₹269 crore in FY24.

3. Return on Equity (ROE): The company boasts an impressive ROE of 50%, highlighting its strong business performance—a rarity in the market.

4. Debt-Free Status: The company is completely debt-free, which further underscores its financial stability.

5.Cash Flow and Dividend: The company generated ₹325 crore in cash during FY24. They invested only ₹19 crore and distributed a dividend of ₹359 crore, indicating that nearly all cash generated was returned to shareholders. With 5.75 crore shares outstanding, this results in a dividend of ₹62 per share.

6. Receivables Efficiency: The receivables days stand at just 32 days, demonstrating the company’s robust business operations and strong cash flow management.

UnlistedZone View

The company is a major brand in the lighting market and stands out technologically, particularly in the IoT sector. Although the IoT market in India has yet to fully take off, once it does, the company is poised to benefit significantly. Over the past four years, the company has generated approximately ₹1,400 crore in cash from operations, of which only ₹120 crore was invested in property, plant, and equipment (PPE), while nearly ₹950 crore was distributed as dividends.

However, the company's topline growth over the last four years has been just 7.43%, which is below the Nominal GDP growth rate of India which is close to 12%, indicating a stagnant stage in the domestic market unless new products or services are introduced. Currently, the company is trading at a P/E ratio of 28x. Given the limited growth prospects, this company might be more suitable for investors focused on dividend income. The likelihood of an IPO is low, as Signify Holding B.V., the parent company, holds a 96.13% stake, with no private equity or venture capital investors to push for a public offering.

Signify Innovations India Unlisted Shares - Price with Market Capitalisation

As of July 2023, Signify Innovations India Unlisted Shares are available at ₹1575/share which values the company at ~ ₹9000 crores