Buy Lumax Autotech; target of Rs 208: HDFC Securities

HDFC Securities' research report on Lumax Autotech

Lumax Auotech (LATL) continued its double digit growth trajectory (Revenue/PAT grew 15/33%) in 3Q despite a slowdown in the OEM segment. LATL’s growth is driven by the aftermarket segment as well as higher other income (relating to designing and mould modification charges). We re-iterate our Buy rating due to our expectations of double digit revenue growth (12-13%) over FY20-21 as LATL is diversifying across product segments and margins are expanding on a richer mix (higher aftermarket sales).

Outlook

We have reduced EPS estimates by 5% over FY19-21E to factor in the moderation in 2W demand and are lowering our target PE Multiple to 16x. We Maintain BUY with a revised TP of Rs 208 (16xDec-18).