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Impressive growth in LED lighting & strong PV order book:

As of Q1FY26, the company’s order book stood at INR 19,000Mn (56% of FY25 sales), with the passenger vehicle segment contributing 82%. During the quarter, LUMX launched lighting systems for Hero, Suzuki, Maruti Suzuki, and Tata Motors. The LED segment made up 84% of the order book and accounted for 61% of revenue in Q1FY26, up from 45% in Q1FY25. We expect the LED share to reach 65-70% in FY26 and believe higher LED penetration and an increase in contribution by the PV segment will drive future growth, as these areas have higher content value per vehicle.

View and Valuation: We revise our FY26/27 EPS estimates downwards by 3.6%/4.7% and arrive at a revised target price of INR 4,150; valuing the company at 18x (maintained) on the average FY27/28E EPS, while introducing FY28E estimates, while maintaining our ‘BUY' rating.

Better than expected EBITDA margin, LED Segment leads growth

* Revenue was up 20.5% YoY and flat QoQ to INR 9,225Mn (vs CIE est. at INR 9,118Mn).

* EBITDA was up 41.7% YoY and up 3.2% QoQ to INR 818Mn (vs CIE est. at INR 775Mn). EBITDA margin was up 133bps YoY and was up 28bps QoQ to 8.9% (vs CIE est. at 8.5%).

* PAT was up 5.9% YoY and down 17.7% QoQ to INR 362Mn (vs CIE est. at INR 393Mn).

LUMX mitigating margin pressure through operating leverage and localization efforts:

LUMX saw a slight increase in EBITDA margin during Q1FY26 on a sequential basis compared to Q4FY25. While improved operating leverage from higher utilization at the new Chakan plant Phase-1 helped, it was further aided by the localization efforts undertaken by the company for some of the components for LED lighting that are imported, which drive the margin downwards. The company intends to localize a significant portion of its imported components in FY26 and FY27 to mitigate these issues. We expect EBITDA margin to improve starting FY26, driven by operating leverage and localization efforts to source components for the LED segment.

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