Buy Lumax Auto, target Rs 80: Sunidhi Securities

Sunidhi Securities & Finance has recommended a buy rating on Lumax Auto Technologies, with price target of Rs 80, in its report dated November 18, 2009. The stock closed at Rs 66.15 on November 19, 2009.

"The expansion plans laid down by Mauti Suzuki, Hyundai, Tata Motors, GM India and presences of MNCs like Nissan, Toyota, Nissan-Renault, Volkswgen, Honda Motors and Ford Motor will only increase the demand of quality components in India. Further easy finance schemes for vehicle purchase, shift from two wheelers to four wheelers and growing concept of second vehicle in urban areas augur well for the automobile and auto component industries. We view LATL's business profile positively given that its principal customer—Bajaj Auto—and Maruti Suzuki have consistently demonstrated its understanding of the domestic market with a series of successful launches across product categories in recent years. We expect the momentum to be sustained. At the CMP of Rs 60, Lumax Auto Technologies is trading at a P/E of 4.2x on FY10E and 3.6x on FY11E We recommend BUY with a target price of Rs 80 in the medium term," says Sunidhi Securities & Finance report.

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