Aditya Infotech: Rocket Stock, Stretched Valuation?

Aditya Infotech's stock has seen a remarkable rally of 427% since its Initial Public Offering in July 2025, pushing its valuation to a significant 47x EV/Ebitda.

Despite this impressive stock performance, questions have emerged regarding the company's reported market-share gains. Aditya Infotech, known for its CP PLUS CCTV camera brand, reported market shares of 31.4%, 39%, and 45.4% in the first three quarters of FY26. This contrasts with its FY25 market share of 20.8% as per Frost & Sullivan.

The company's management forecasts nearly 50% year-on-year revenue growth for FY27. This growth is expected to be equally driven by higher average selling prices (ASP) and unit volume increases. To support this, manufacturing capacity has been increased from 1.9 million units per month to 2.5 million units per month.

However, rising costs for imported chipsets and a depreciating rupee could impact future profit margins. The CCTV camera market also faces headwinds similar to other electronics, where price increases might affect demand. Investors should note that the Q4FY26 Ebitda margin of 18.1% was likely boosted by low-cost inventory.

The management anticipates a sustainable Ebitda margin of 14-15% for FY27 and FY28. If the company achieves revenues of ₹6,250 crore in FY27 with a 14.5% Ebitda margin, the stock's EV/Ebitda multiple remains high at 47. Competition from other organized players also exists.

Despite these near-term valuation concerns, the overall market for STQC-certified CCTV cameras is large and growing rapidly. India's mandate for STQC-certified cameras from April 9, 2025, aims to enhance privacy and cybersecurity. This positions Aditya Infotech for long-term growth, though new investors might experience a longer wait for returns.