Lumax Industries |3QFY2019 Result Update

February 12, 2019

LUMAX Industries

BUY

CMP

`1461

Target Price

`2150

Y/E March (` cr)

Q3FY19

Q3FY18

% yoy Q2FY19

% qoq

Investment Period

12 Months

Net sales

431

371

16%

518

-17%

EBITDA

15%

-15%

EBITDA margin (%)

-7

Stock Info

PAT

183.9%

133%

Sector

Auto-Ancillary

Market Cap (` cr)

1,366

In Q3 FY19, Lumax Industry Ltd. (LIL) has reported 16% growth on Y-o-Y basis on

Beta

1.3

52 Week High / Low

2585/1386

revenue front to `431 Cr as compare to `371 Cr in Q3FY18 largely on account of

Avg. Daily Volume

3,901

Face Value (`)

value growth. Growth in revenue is encouraging owing to flattish growth in sales by

BSE Sensex

36,343

major OEM in Q3FY19.

Nifty

10,876

Reuters Code

LUMA.BO

PAT has grown by 15% on Y-o-Y basis post adjustment of exceptional gain (one

Bloomberg Code

LUMX IN

off

` 36.20 Cr.) to ` 19.67 Cr as against ` 17.1 Cr in same quarter last year.

Operating margin has been remain flat to 8.8% in Q3FY19 as against 8.89% in

Shareholding Pattern (%)

Q2FY19.

Promoters

75.0

During the quarter LIL has added four new models in its portfolio such as Ertiga,

MF / Banks / Indian Fls

0.8

WagonR, Jawa and Marrazo we expect this will be key revenue driver for LIL in

FII / NRIs / OCBs

1.1

Indian Public / Others

23.2

coming quarter as launch of new model initially capture market share.

LED contribution to improve margin: Share of LED is remain same in the quarter

under review against previous quarter however it has improved from 8% in FY17 to

Abs.(%)

1yr

3yr

35% in Q3FY19 but at same level compare to Q2FY19, However LIL enjoys 80%

Sensex

3.4

6.9

28.2

market share in LED lightning in CV segment, current penetration of LED in CV is

LUMAXIND

(11.1)

(35.7)

274.0

very low and management expect it to improve going forward as major OEM’s like

Ashok Leyland, Bharat Benz and Tatamotors are coming up with LED lightening in

3 Years Performance charts

some newer model.

3000

Outlook and Valuation: Our long term bet on LIL is positive and we expect LIL to

2500

grow above the industry growth going forward. At the CMP of `1461 stock is

2000

available at 13X of FY20E EPS of `116. Recent correction in stock price provide

1500

good entry opportunity for investment. We maintain our BUY recommendation for

1000

target price of ` 2150 with potential upside of 47%.

500

Exhibit 1: Key Financials

Y/E March (` cr)

FY16

FY17

FY18

FY19E

FY20E

Net Sales

1,255

1,271

1,650

1,947

2,278

% chg

Source: Capitaline Angel Research

Net Profit

102

109

% chg

2,160

EBITDA (%)

7.1%

7.9%

8.2%

8.9%

EPS (Rs)

109

116

P/E (x)

Kripashankar Maurya

P/BV (x)

5.1

4.4

3.8

3.1

2.6

022 39357600, Extn: 6004

RoE (%)

13.7

17.6

19.7

23.0

20.4

[email protected]

RoCE (%)

13.9

15.2

18.7

18.9

21.4

EV/EBITDA

16.5

14.2

10.8

8.7

6.9

February 12, 2019

Lumax Industries |3QFY2019 Result Update

Exhibit 1: Q3FY19 Performance

In Cr

Q3FY19

Q3FY18

Q2FY19

YOY %

QOQ%

Net Sales

431

371

518

16%

-17%

Total Income

430

371

518

16%

-17%

Total Expenditure

393

338

473

16%

-17%

Raw Material Consumed

275.91

239.6

341

15%

-19%

Stock Adjustment

-5.72

-7.7

Purchase of Finished Goods

4.37

1.9

127%

55%

COGS

275

234

348

17%

-21%

Employee Expenses

17%

Other Expenses

62.87

56.5

11%

-9%

As a % of sales

Raw Material Consumed

64%

65%

66%

Stock Adjustment

-1%

-2%

Purchase of Finished Goods

COGS

64%

63%

67%

Gross Margin %

36%

37%

33%

Employee Expenses

13%

11%

Other Expenses

15%

13%

EBITDA

15%

-15%

Forex Loss (Gain)

-3.4

-1.5

4.3

Other Income

1.30

0.4

1.1

233%

20%

Exceptional Iteam

36.20

Profit from Associate

1.58

0.0

1.8

-14%

Interest

4.19

1.1

3.7

271%

14%

PBDT

76.28

33.72

39.78

126%

92%

Depreciation

14.21

21%

PBT

62.07

21.94

25.97

183%

139%

Tax

13.45

4.8

5.1

180%

164%

PAT

48.6

17.1

20.9

184%

133%

Ratios

BPS

EBITDA margin (%)

8.84%

8.89%

8.66%

-5

PAT margin %

11.29%

4.62%

4.03%

667

726

Tax rate %

21.66%

21.93%

19.60%

-26

206

Source: Company, Angel Research

February 12, 2019

Lumax Industries |3QFY2019 Result Update

Customer wise sales mix

120.0%

100.0%

4.0%

5.0%

9.0%

6.0%

9.0%

8.0%

9.0%

11.0%

10.0%

7.0%

6.0%

80.0%

7.0%

32.0%

34.0%

60.0%

31.0%

36.0%

32.0%

40.0%

22.0%

20.0%

21.0%

19.0%

17.0%

20.0%

9.0%

11.0%

10.0%

11.0%

12.0%

17.0%

14.0%

0.0%

Q2FY18

Q3FY18

Q4FY18

Q1FY19

Q2FY19

Q3FY19

HMSI HML Others Maruti TATA M&M HCIL

Source: Company, Angel Research

Q3FY2019 Key highlights of results and con call

Outlook and Valuation

 LIL has reported robust growth of 16% in revenue from `371Cr. in FYQ3FY18

to `431Cr in Q3FY19 despite subdued growth in OEM business under the

quarter review. Growth was mainly attributed to 14-15% growth in value of

the business;

 During the quarter LIL has made exceptional gain on ` 36.2Cr by selling land

and building;

 Management expects similar kind of profit from associate by end of FY19;

 Total capex for FY19 is guided around `80 Cr of which `66 is already been

done and for FY20 expect capex to be around `100-150 Cr. against

technological upgrade, R&D and brownfield expansion. At current level overall

utilization is ~70%;



Management expects localization of LED component to bring down to 50% by

FY20 from 65% currently which will help to improve operating margin.

Valuation

Our long term bet on LIL is bullish and expect LIL to grow above the industry growth

going forward owing to increasing penetration of LED lights. At the CMP of `1461

stock is available at 13X of FY20E EPS of `116. We maintain our BUY recommendation

for target price of ` 2150 with potential upside of 47%.

Risks to our estimates

 Downside risk to target revenue and net income is slower than expected adoption

of LED lamp by OEM’s and higher content of import raw material respectively.

 Upside risk to target revenue is faster growth in PV and 2W segments.

February 12, 2019

Lumax Industries |3QFY2019 Result Update

Income statement

Y/E March (` cr)

FY16

FY17

FY18

FY19E FY20E

Total operating income

1,255

1,271

1,650

1,947

2,278

% chg

Total Expenditure

1,167

1,170

1,515

1,787

2,075

Raw Material

767

818

1,104

1,295

1,526

Personnel

141

160

189

204

239

Selling and Administration Expenses

107

126

147

Others Expenses

183

106

115

162

EBITDA

101

135

160

203

% chg

(65)

(% of Net Sales)

7.1%

7.9%

8.2%

8.9%

Depreciation& Amortisation

EBIT

103

136

% chg

(76)

(% of Net Sales)

Interest & other Charges

Other Income

Extraordinary Items

Recurring PBT

148

147

% chg

(80)

(1)

Tax

PAT (reported)

102

109

% chg

(82)

(% of Net Sales)

2.9

4.3

5.2

4.8

Basic & Fully Diluted EPS (Rs)

109

116

% chg

122

Source: Company, Angel Research

February 12, 2019

Lumax Industries |3QFY2019 Result Update

Balance Sheet

Y/E March (`cr)

FY16

FY17

FY18

FY19E

FY20E

SOURCES OF FUNDS

Equity Share Capital

9.4

Reserves& Surplus

259

300

353

435

523

Shareholders Funds

268

309

362

445

533

Total Loans

101

Other Liabilities

Total Liabilities

415

423

510

596

684

APPLICATION OF FUNDS

Net Block

425

419

532

640

756

Capital Work-in-Progress

Investments

114

Long Term Loans & Advances

Current Assets

332

348

562

682

750

Inventories

105

116

169

208

218

Sundry Debtors

181

191

318

384

462

Cash

Loans & Advances

Investments & Others

Current liabilities

444

456

721

843

956

Net Current Assets

-111

-109

-159

-161

-206

Other Non Current Asset

Total Assets

415

423

510

596

684

Source: Company, Angel Research

Cash flow

Y/E March (`cr)

FY16

FY17

FY18

FY19E

FY20E

Profit before tax

148

147

Depreciation

Change in Working Capital

(0)

(15)

(45)

Interest / Dividend (Net)

Direct taxes paid

Others

(7)

(24)

(40)

(46)

(38)

Cash Flow from Operations

111

157

202

181

(Inc.)/ Dec. in Fixed Assets

(38)

(63)

(132)

(119)

(149)

(Inc.)/ Dec. in Investments

(10)

(17)

Cash Flow from Investing

(37)

(62)

(128)

(129)

(166)

Issue of Equity

Inc./(Dec.) in loans

-13

Others

(120)

(27)

(30)

(23)

(27)

Cash Flow from Financing

(59)

(39)

(11)

(23)

(27)

Inc./(Dec.) in Cash

(7)

(11)

Opening Cash balances

Closing Cash balances

Source: Company, Angel Research

February 12, 2019

Lumax Industries |3QFY2019 Result Update

Research Team Tel: 022 - 39357800

E-mail: [email protected]

Website: www.angelbroking.com

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Disclosure of Interest Statement

Lumax Industries

1. Financial interest of research analyst or Angel or his Associate or his relative

2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives

3. Served as an officer, director or employee of the company covered under Research

4. Broking relationship with company covered under Research

February 12, 2019