Lux Industries has target price of ₹1502

[Ravi]

Lux Industries Ltd. (LUX), reported revenue for Q1FY26 was in-line while EBITDA and PAT was lower than our estimates due to lower than expected gross margins. Revenues in Q1FY26 increased by ~12.9% YoY, supported by a volume growth of ~17% YoY. Average selling price declined by ~4% YoY due to change in product mix. In Q1FY26 company’s men’s wear brand Lux Cozi & Lux Venus reported volume decline of ~7% & ~3% YoY respectively. Company received good response from its recently launched brands like Lux Nitro, Lux Parker and Lux Cozi Pynk. It has increased focus on modern trade and ecommerce. Revenue growth was supported from incremental revenue from its newly launched brands such as Lux Parker (~Rs 440 mn), Lux Nitro (~Rs 320 mn) and Lux Cozi Pynk (~Rs 60 mn). Company’s new manufacturing facility at Jagadhpur, Hosiery Park at West Bengal is now fully operational. Since raw material prices are now stable, we expect company to report healthy volume CAGR of ~12% over FY25-27E. We remain positive on Lux’s mid to long term growth prospects for its strong brand equity and long-standing operations in the inner wear industry. We maintain our “Buy” rating on the stock. Q1FY26-Key Earnings Highlights

 In Q1FY26, company’s revenue increased by ~12.9% YoY, supported by a volume growth of ~17% YoY.

 Gross margin in Q1FY26 declined by ~191 bps YoY to ~30.4%.

 In Q1FY26 EBIDTA margin declined by ~251 bps YoY to ~5.8%. EBIDTA margins declined on account of lower gross margins.

 PAT for Q1FY26 declined by ~30.6% YoY to ~Rs 236 mn.

Continued focus on power brands

Company aims to strengthen its market share in its legacy and power brands like Lux Cozi, Lux Venus, Lux Inferno, Lux Cottswool, Lyra and ONN among many others. To achieve the same, company is doing targeted ad campaigns. Company has recently on-boarded various celebrities like Shraddha Kapoor for Lux Cozi Pynk and Kartik Aryan as the brand ambassador for its new brand “Lux Nitro”. Management believes that these new celebrity endorsements should help the company to gain further traction in the market.

Outlook and Valuation:

 We believe, company is well-poised for growth on the back of stability in raw material prices, increasing share of premium products, new product launches and growing retail & online presence.

 We continue to value the stock at 20x FY27e EPS of Rs 75.1 to arrive at a target price of Rs 1502 and maintain our “Buy” rating on the stock.