Fabulous quarter: Lumax Auto Tech Ltd (LATL) reported a stellar quarterly performance with Revenue/EBITDA/PAT growing 50%/70%/32% YoY. The EBITDA margin improved 170 bps YoY to 13.8% led by improvement in product mix and higher contribution from subsidiaries IAC India and Greenfuel Energy.
Largest client M&M – One of the key growth drivers: IAC India commenced production of the integrated cockpit console and the door panel for the 2 new Battery Electric Vehicle (BEV) models of M&M (BE6 and XEV 9e) during the quarter. IAC is the sole supplier of these components and is also supplying the same for the Thar Roxx. The content per vehicle for the BEVs stands between Rs 40,000-45,000 and is significantly higher than the ICE models. The company also recently inaugurated 2 new facilities at Chakan in Pune in close vicinity to M&M’s production facility for the BEVs. One of the facilities has been solely dedicated for M&M. IAC India is also looking to get onboarded as a supplier for other future models of M&M.
IAC India now a 100% subsidiary: LATL has increased the stake in IAC India to 100% from the current 75% which will increase the profit available to LATL shareholders. The company further plans to merge IAC India into LATL which will drive improvement in cash flows for LATL.
Mid-Term plan – NorthStar unveiled: The company unveiled its next mid-term plan for FY26-31 wherein it targets a) Minimum 20% CAGR in revenue, b) Vision for 20% EBITDA margin, c) 20%+ RoCE and d) 20%+ revenue contribution from future & clean mobility. Company aims to double its consolidated EBITDA over FY25-28.
Maintain BUY – Target Price raised to Rs 1,220
LATL continues to outperform the industry on back of higher content per vehicle led by new niche product introductions and margin accretive acquisitions. It has a robust presence within M&M’s supplier ecosystem which has been gaining market share within the domestic PV industry. The outlook for M&M remains strong for FY26 which should drive substantial earnings growth for LATL too. The EBITDA margin improvement had been already factored in by us at the time of initiation on back of the margin accretive acquisitions of IAC India and Greenfuel Energy which has now started to translate into actual numbers. At the current price of Rs 970, the stock is currently trading at a P/E of 23.0x/15.9x of its FY26E/FY27E EPS of Rs 42.2/Rs 61.0 respectively. We roll forward our EPS estimate to FY27E and continue to value the stock at 20x FY27E EPS of Rs 61.0 and raise our TP to Rs 1,220, giving an upside potential of 25.8%. Any further acquisition or onboarding of new client will act as an additional tailwind and is likely to further rerate the stock.