Buy Lumax Industries Ltd For Target Rs.7,100 by Choice Institutional Equities Ltd
Strong order book & rising LED penetration to drive growth:
LUMX’s order book stands at INR 25,000 Mn (~55% of FY26 revenue), with ~90% comprising LED products and 65% scheduled for SOP in FY28E. PV contributed 64% of Q1FY27 revenue, while LED contribution increased from 61% to 63% in Q1FY27. Share of revenue from Maruti Suzuki and Tata Motors grew 43% and 68% YoY, respectively, supported by model SOPs. We expect rising LED penetration, premiumisation and content per vehicle to remain growth drivers, supported by advanced technologies such as dynamic, laser and projector lighting
Bengaluru facility to strengthen growth visibility:
LUMX’s Bengaluru facility, catering to Maruti Suzuki and Toyota programmes, remains on track for commissioning in Q4FY27E. Sanand and Bawal expansions are underway. The company raised FY27 capex guidance to INR 2,000–2,500 Mn from INR 1,000– 2,500 Mn, driven by recent business wins. We believe these capacity additions will support order execution and sustain above-industry growth
Margin expansion through localisation and operating leverage:
LUMX maintained EBITDA margin at 9.0% in Q1FY27 despite 120–130 bps cost inflation, while management retained FY27 margin guidance of 10.5–11.0% (Incl. other income). Localisation remains a key margin lever, with bare PCB localisation targeted at 70–80% and connectors at 40–50%. We forecast delayed OEM price recovery, operating leverage, localisation and premiumisation to support margin expansion. Management targets 15–20% revenue CAGR over the next 3–5 years and EBITDA margin above 13% within 3–4 years.
View and Valuation:
We largely maintain our FY27/28E EPS estimate, valuing the company at 22x (maintained) on FY28E EPS and retain our target price of INR 7,100. Accordingly, we reiterate our ‘BUY ’ rating on the stock, supported by a strong revenue visibility from the order book, accelerating LED penetration and upcoming Bengaluru capacity commissioning
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