SPA Research's research report on LumaxLumax Industries Q3FY16 results came ahead of estimates with topline growth of 14.5% YoY to INR 3099 mn and bottomline growth of 118.1% to INR 82 mn. The results higher than estimates due to higher sale of moulds & tools (up 140% YoY) and reduction in cost. EBITDA grew by 44% YoY to INR 205 mn whereas margins expanded by 136 bps YoY to 6.6%. We maintain Buy on the stock with a revised target price of INR 623 based on 15x FY17E earnings. ~50% market share in domestic passenger car industry coupled with superior technological knowhow places the company on a strong footing. Lumax, being a preferred choice of OEMs, is set to benefit from significant increase in production of cars (given the current low level of penetration of ~19 cars/1000 persons in India v/s ~126 in Brazil & 806 in USA and emergence of India as an export hub). In the near term, growth in passenger vehicle industry and recovery in 2-Wheeler industry coupled with decent order book of INR 5 bn for new models ensures revenue visibility followed by the opportunity from fresh OEM capacities coming up in Gujarat. Profit margin & return ratios are set to expand on the back of higher utilisation across plants, lower capex requirement going forward & decline in finance costs. Topline & bottomline is expected to grow at a CAGR of 13.9% & 53.2% respectively between FY15-17E. We maintain Buy on the stock with a revised target price of INR 623 based on 15x FY17E earnings. For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
