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In Q1FY25, LATL performance was lower than expected on Revenue/EBIDTA/PAT front. Weaker set of performance in aftermarket and lower offtake from key clients led to lower than expected performance. However, as a long term strategy the company has diversified into PV segment by acquiring IAC India under the plastic moulding part category where majority of the revenue comes from PV segment with M&M as largest customer. LATLs revenue share from PV-50%, 2/3W-24%, Aftermarket-11%, CV-8% and others - 6%. On segmental side advance plastics-56%, Mechatonics-4%, Structure & Control system-22%, Aftermarket-11%, others-7% to overall revenues.

* On the operational performance front, the company reported a revenue growth of 19.7% QoQ to Rs.7.6bn and operating profit for the quarter was up by 9.8% YoY to Rs.880mn. Margin for the quarter came at 11.6% (-105bps YoY/-49bps QoQ). PAT for the quarter stood at Rs.317mn (+43% YoY/-28.3% QoQ). Total order book is INR 1000cr of which 90% is new business. 25% of the order book will mature in H2FY25, 55% in FY26 and 20% in FY27. EV represents 40% of the total order book.

* Revenue guidance for FY25 is 15-20% on consolidated basis, growth to come from new model additions and new product additions for current models. For subsidiaries the management expects revenue growth of 30-35% with a sustainable margin of 15-16%. On the JV front, Lumax Ituran expects to see a growth around 50-55%, Alps India to grow more than 50%, Lumax Yokowo more than 50% (due to low base).

* Healthy order book: LATL’s current order book stood around Rs.9.2bn of which 60% order is from the PV segment. IAC India is also looking to do brownfield expansion for M&M for new EV models. For FY25, total capex would be Rs.1.6bn, of which IAC's share would be around Rs.550mn, and the remaining for the rest of the entity

* LATL’s new products such as Instrument Panels, Cockpits & Consoles, Headliner & Overhead Systems, Telematics, Gearshift Towers, and Antennas carry a healthy growth prospect in the medium to long term as these products are getting better traction in the market. Hence, OEM is also increasing the penetration of the latest features and technology in their new launches or refresh models.

* Outlook and Valuations: We maintain our positive view on the LATL given: 1) its diversified product portfolio; 2) improving PV share post IAC India acquisition; 3) increasing demand for the automatic gear shifter; 4) increasing content value due to premiumisation; and 5) healthy growth prospectus of JV/associates. We value LATL based on 17x of FY26E EPS with a TP of Rs.587 and recommend BUY.

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