Lumax Auto Technologies Ltd. share price target

LATL has a lean balance sheet with low leverage (0.1x), a consistent dividend payout record (20%+ dividend payout) and an efficient working capital cycle (14 days). We value the stock at Rs. 681 (15xFY19E EPS). Maintain BUY Lumax Autotechs (LATL) 1QFY18 numbers were mixed bag. Revenue at Rs. 2.35bn (-11% YoY) dragged by revenue from lighting (owing to decline in Bajaj Auto volume) and aftermarket sales. EBITDA at Rs 202mn (-1% YoY, in line estimates) with improved margin of 8.6 %(+82bps YoY). APAT at Rs 92mn (-22% YoY) dragged by fall in other income and higher tax.

Lumax Autotechs (LATL) 4QFY17 numbers were adversely impacted by demonetisation. Net revenue stood at Rs 2.31bn (-2% YoY), led by a decline in the plastic molded parts business and aftermarket sales. EBITDA at Rs 126mn (-13% YoY) with a margin of 5.4% (-72bps YoY), was impacted by negative operating leverage.

Despite the adverse impact of demonetisation on the auto industry, Lumax Autotech?s (LATL?s) net revenue stood at Rs 2.3bn ( 6% YoY), driven by strong growth in the gear shifters and seat frames segments. However, EBITDA was lower at Rs 142mn (-7% YoY) with a margin of 6.1% (-84bps YoY) owing to higher RM and employee costs. RPAT (after MI) at Rs 43mn (-40% YoY) was impacted by ~Rs 33mn extraordinary expenses as compensation paid to workers for closure of a plant in Waluj.

Buy Lumax Auto Technologies at CMP Rs. 407.95 and add on declines Rs. 352-364 for the Sequential Targets Rs. 466-512

Lumax Auto Tec hnologies Ltd (is a part of the D.K. Jain Group of companies) through its wholly owned subsidiary, LDK, is the market leader in Design, Testing and Manufacturing of Parking Brak es & Gear Shift with a strong presence in both passenger cars & commercial vehicle segments. Also LATL is...