Buy Lumax AutoTech Ltd For Target Rs. 1,375 By Choice Broking Ltd
Business Overview: LMAX, part of the Lumax-DK Jain Group, is a Indian automotive component manufacturer with over 40 years of industry presence. The company operates 26 manufacturing facilities across 6 Indian states, supported by 2 engineering centers and international design centers in Taiwan and the Czech Republic. LMAX serves major OEMs with a diversified product portfolio including lighting, interior systems, electronics, and alternate fuel components. In FY25, LMAX reported revenue of INR 36,367 Mn with an EBITDA margin of 14.2%. Revenue is expected to grow at a CAGR of 20.8% from FY25 to FY27 increased JV wallet share, and growing scale across high-value segments.
What is the Impact of IAC India Full Acquisition on LMAX’s Growth?
LMAX acquisition of the remaining 25% stake in IAC India for INR 2,210 Mn has made it a wholly-owned subsidiary of the company. IAC, which currently contributes around INR 12,000 Mn in revenue, is now fully under LMAX’s strategic and operational control. The acquisition will reduce minority interest in consolidated earnings from ~23% in FY25 to 10–11% in FY26, enhancing PAT for LMAX shareholders.
We expect IAC India to grow at a 17% CAGR through FY27 while maintaining EBITDA margins of 17–17.5%. LMAX is also exploring a legal merger of IAC into the standalone entity to streamline operations and drive synergies. IAC’s INR 6,000 Mn order book and exclusive supply role for Mahindra’s BEV models (BE6, XUV 9e) strengthen its positioning in high-value interior systems and the EV segment. We expect this acquisition to significantly improve free cash flow and provide leverage for future inorganic growth by FY27.
What will drive LMAX’s revenue and profitability growth through FY27?
We expect LMAX to grow organically from INR 36,370 Mn in FY25 to approximately INR 53,950 Mn by FY27, supported by new product launches, higher content per vehicle, and deeper OEM penetration. In addition, the company plans 1–2 strategic acquisitions in lightweighting and export-oriented segments, following its approach of acquiring majority stakes (typically over 60%) while retaining operational independence of acquired firms.
Strategic partnerships with global players like Alps Alpine (infotainment systems) and Yokowo (connected vehicle antennas) will drive technology-led expansion. On the profitability front, we expect PAT to grow from INR 2,290 Mn in FY25 to INR 3,180 Mn in FY26, and further to INR 4,260 Mn by FY27, driven by margin expansion, increased JV wallet share, and growing scale across high-value segments.
How will China's rare earth magnet export ban impact LMAX’s EV-linked growth?
The ongoing export restrictions on rare earth magnets by China, which accounts for ~85% of India’s magnet imports, pose a direct threat to LMAX Mahindra-dedicated EV plant. This facility, responsible for supplying integrated cockpits and door panels for Mahindra’s BE6 and XUV 9e models, faces underutilization risk if production halts begin by mid-July 2025—as expected when existing magnet inventories are exhausted. LMAX holds a INR 13,500 Mn order book, with approximately 40% tied to EV models across multiple OEMs. A slowdown in EV production due to magnet shortages could delay revenue recognition across this portion of the business, including Mahindra-linked volumes
While LMAX is partly shielded through its powertrain-agnostic components (e.g., cockpits, lighting), we believe prolonged shortages may pressure FY26 revenue guidance of INR 43,600–45,400 Mn and challenge EBITDA margin targets of 14.5–15% if magnet costs escalate.
What makes LMAX a standout investment in India's automobile industry?
LMAX stands out in India's automobile industry due to its robust financial performance, with consolidated revenue exceeding INR 36,367 Mn and a 37% profit increase in FY25. The company’s aggressive growth strategy—driven by strategic acquisitions like Greenfuel in the CNG fuels space and the full consolidation of IAC India—positions it at the forefront of emerging mobility solutions. LMAX’s expanding product portfolio, focus on R&D, and rapid capacity additions enable it to capitalize on the shift toward EVs and CNG vehicles. Its diversified client base, and consistent double-digit growth reflect market leadership and resilience. With a healthy balance sheet, ongoing investments in technology, and a clear roadmap for margin expansion, LMAX is well-placed for sustained outperformance and value creation for investors.
Recommendation: We maintain a positive outlook on LMAX, maintaining our ‘BUY’ rating, with a TP of INR 1,375.
Key Risks:
* Cyclical Industry Exposure: LMAX has high dependence on the cyclical automotive industry, meaning any slowdown in automobile sales or supply chain disruptions can directly and significantly impact its revenues and profitability.
