The Surveillance State is Growing and so is This Indian Company 

Dear Viewers,

I came read an interesting post on social media.

A foreign tourist visiting China got confused and sought directions from a local citizen. However, he did not understand the response due to communication and language issues.

What happened next impressed me. The local made it a point to personally guide and walk along with the tourist to the destination himself.

Impressive, right?

Well, not really. There is a twist.

The person who shared this story suggested that this was not just an act of kindness. It was an act of calculated self-interest.

You see, in parts of China, where surveillance cameras are practically everywhere, people are scored based on their behaviour - a concept known as the 'social credit system'.

Good behaviour can earn you perks; bad behaviour can cost you access or privileges. So, the helpful local may have been playing to the cameras, hoping to earn social credit for being a "good citizen."

This immediately reminded me of George Orwell's 1984, a chilling portrayal of a society where Big Brother is always watching. It's fiction, but prophetic in some ways - especially when we look at how deep and wide surveillance technology has penetrated modern societies.

While searching for the post again (without much luck), I stumbled across an old article that said Chongqing, a major Chinese city, had one surveillance camera for every 5.9 people - and that was back in 2019. One can only imagine how far it's gone since.

But surveillance, for all its dystopian associations, isn't entirely dark.

In fact, technology has made it smarter - and in many ways, more helpful.

Today, AI-powered facial recognition can get you through airport queues faster. With platforms like DigiYatra, boarding a flight is smoother and quicker.

The crime cases can be cracked faster. Traffic rules are better followed. Parents can remotely monitor their babies while being away for work.

And just the presence of a camera often brings a sense of security - whether you're walking on the street or working in an office building.

In India too, this shift is underway. Surveillance isn't just common - it's being made compulsory in certain places.

In July this year, CBSE made it mandatory for all schools to install CCTV systems in common areas - classrooms, libraries, and corridors.

Recently, even the voting process came under scrutiny, with the opposition demanding CCTV footage from polling booths to ensure election integrity.

With terrorist acts on the rise, video surveillance comes handy in ensuring national safety.

Naturally, all of this creates a tailwind for the video surveillance industry. In FY25, the global market for surveillance equipment - including cameras, recorders, encoders, and software - was valued at around US$ 35.9 bn. It's expected to grow at a CAGR of over 10% for the next five years.

The Indian market, while smaller at US$ 1.3 bn (or Rs 106 bn), is growing even faster - at nearly 16.5% annually (Source: Frost and Sullivan).

One company sitting right in the middle of this growth trend is Aditya Infotech - the company behind the CP Plus brand.

You've probably seen their products in homes, offices, or shops. CP Plus is the undisputed leader in India's surveillance market, with over 20.8% share. It's also the third-largest global player by volume as of FY24. The company recently got listed and is riding several positive waves.

First, the regulation. In April 2025, the Ministry of Electronics and Information Technology (MeitY) mandated that all network CCTV cameras sold in India must be STQC (Standardisation Testing and Quality Certification)-certified. It aims to root out cheap and insecure imports that could be of poor quality or a threat to data security.

This is positive for domestic players that meet these standards. CP Plus, for example, claims to have the largest portfolio of STQC and BIS-certified products currently in the Indian market.

With non-certified inventory getting phased out and government and enterprise clients leaning toward secure, certified systems, the company is well-positioned to capture more market share.

It's not just compliance where the company is strong. It's also expanding on the innovation front. It has set up an R&D centre in Ahmedabad. Another R&D center is underway in Taiwan.

The company is also working on backward integration - making its own cables, housings, power electronics, and even CCTV lenses. This helps reduce costs, build supply chain resilience, and improve control over quality.

Earlier, it had a 50% stake in a manufacturing joint venture with Dixon Technologies, India's top EMS player. It now owns 100% of it. In turn, Dixon held about 6.6% of Aditya Infotech.

CP Plus isn't just about hardware either. It offers cloud storage, AI-powered video analytics, and an IoT-based platform for surveillance services.

Its customer base is diversified - with 60% revenue coming from small and medium businesses, 30% from large enterprises and government, and the remaining 10% from home users.

The company is betting big on its IP-based products - a segment that's growing faster and offers higher value compared to traditional analog surveillance systems.

The company used around Rs 3.75 bn from the IPO proceeds to reduce debt, and is now investing in capacity expansion. Post expansion, the revenue growth potential could reach 60%.

For FY26, the management is guiding revenue growth of 25-30%, operating margins of 10-11% and expects EBITDA and net profits to grow over 50% and 75% respectively - thanks to scale and operating leverage.

Yes, the trailing PE ratio is very high at around 107 times, but if the company delivers on its earnings guidance, the forward PE drops to a reasonable 26 times.

Now, for a market leader with high growth potential, this is a scenario worth watching out for. It remains to be seen how cheap the stock price will trade in the future.

Like every other story, it has its flaws. The business is heavily reliant on one kind of product category. There are supply chain challenges and the company will need to keep up with rapid technological change to stay ahead of competition.

The business is working capital intensive. These are risks that investors must keep in mind.

That said, in a world where surveillance becomes a norm, even necessity, this a stock worth having on your watchlist.

Hope you found this information useful.

Thank you for watching. Goodbye