Buy Lumax Industries Ltd For the Target Rs.565 by Choice Broking Ltd
LUMX beats street expectations on all fronts, LED and Passenger Vehicle Segments to drive future growth
* Revenue for Q3FY25 was at INR 8,871 Mn, up 40.4% YoY and up 8.7% QoQ (vs CEBPL est. at INR 8,199 Mn).
* EBITDA for Q3FY25 was at INR 699 Mn, up 20.1% YoY and up 14.1% QoQ (vs CEBPL est. at INR 607 Mn). EBITDA margin was down 134 bps YoY and up 37 bps QoQ at 7.9% (vs CEBPL est. at 7.4%).
* PAT for Q3FY25 was at INR 335 Mn, up 30.9% YoY and up 18.4% QoQ (vs CEBPL est. at INR 294 Mn)
LUMX to mitigate Margin Pressure through operating leverage and localization efforts:
LUMX saw a slight dip in EBITDA margin during the quarter. While improved operating leverage from higher utilization at the Chakan plant Phase-2 (70% in Q3FY25 vs 50% in Q2FY25) helped, it was offset by a 50-60 basis point cost increase from anti-dumping duties on PCB imports and rising raw material prices. The company plans to pass these increased raw material costs onto customers with a 3-6 month lag and intends to localize a significant portion of its imported PCBs in FY26 to mitigate the duty impact. We expect EBITDA margin to improve starting FY26, driven by operating leverage and localization efforts
Impressive Growth in LED Lighting & Strong PV Order Book:
As of Q3FY25, the company’s order book stands at INR 26,000 Mn, with the passenger vehicle segment contributing 78%. During the quarter, LUMX launched lighting systems for Mahindra, Maruti Suzuki, and Tata Motors. The LED segment made up 86% of the order book and accounted for 52% of revenue in 9MFY25, up from 36% in the same period last year. We expect the LED share to reach 60% in FY26 and believe higher LED penetration and increase in 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 by 1.9%/(6.2)% and roll over our forecasts forward to come up with a revised target price of INR 3,260; valuing the company at 15x (unchanged) on FY27E EPS while maintaining our ‘BUY' rating. We retain our positive view on LUMX driven by its strong relationship with the majority of the OEMs, new model additions in the PV segment and increasing share of LED.
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SEBI Registration no.: INZ 000160131
