Buy Lumax Inds; target of Rs 1597: Axis Direct

Axis Direct's research report on Lumax Inds

The company reported sales of Rs 1,300 cr in FY17, an EBIDTA of Rs 100 cr and PAT after MI of Rs 55 cr. The net raw material costs as % of Sales have been consistently reducing over last couple of years. The company’s net raw materials as % of sales were reported at 65.1% in FY17 vs 66.8% in FY16 & 68.99% in FY15.

Outlook

Lumax Ind.s has been a market leader with share of 55-60%in Indian Automobile Lighting industry and would be a BIG beneficiary of increasing penetration of both 2 wheelers & 4 wheelers along with changing perception about Auto lighting. Backed by the strong R&D capability, Lumax would be able to capitalize on the opportunities available due to rising share of LED in automobile lighting systems. We recommend a BUY with a price target of Rs 1597.