Buy Lumax Industries; target of Rs 2382: CD Equisearch

CD Equisearch's research report on Lumax Industries

Crisil expects Indian auto component production to expand 12-14% in FY19 on the back of product changes (shift towards higher electronic content) and emission and safety regulations. Pick up in rural demand and state pay commission payouts is expected to galvanize demand in two wheeler and PV segment. Demand for CV and tractors is forecast to remain buoyant owing to higher thrust of government on infrastructure and four successive years of good crops.

Outlook

We, therefore, assign ‘buy’ rating on stock with revised target of Rs 2382 (previous target: Rs 2602) based on 22x FY20e earnings (forward PEG: 1) over a period of 9-12 months.