Lumax Auto Tech 1Q19
Numbers & Others
Standalone business – Majority of revenue comes from lighting systems; major customer includes bajaj auto and HMSL. 100 new SKUs already launched in 1Q19 vs estimates of 200 new in FY19 – 202crs (112crs) 9.4%. Lighting business – Revenue stand at 80crs, growth of 7% due to accounting change by Bajaj Auto. Growth would have been +35% (adjusted for Accounting changes) on Like for Like basis. Margin in lighting is 10-12% and around 0.5% positive impact due to change in accounting. Topline to be lower by 60-70crs due to change in accounting at Bajaj. Revenue growth excluding the impact of total control of Gill Auston would be 36-37%. Impact of management control is ~11crs for the quarter.
DK auto – Revenue of 77crs/80crs and margins in mid double digit. Revenue declined due to change in accounting change. Like on like growth is +20%.
Gill Auston – Taken Management control in this business. In 1Q19 positive impact on revenue is ~11crs. Revenue would be higher by 50crs inFY19 due to this consolidation.
Accounting change impact - 1Q impact was around 15crs. We expect topline to be negatively impacted by 60-70crs and 25-30% growth on consolidated levels.
Gross margin – would be remaining protected from ups and downs.
EBITDA – expects margins to improve going ahead. This is sustainable. Expects +150bps margin expansion. Margins would be 11.5-12% . we would like to grow at a healthy pace.
Revenue at full capacity - Company expects at this capacity, they can do max 1400crs of revenue. Asset turnover is ~3-3.5x.
Bajaj Auto - contributed 360crs for Fy18. Bajaj’s focus on volumes won’t hurt our margins. On the other hand, we expect our volumes to increase in conjunction with Bajaj’s volume. Overall, we expect atleast 10% growth from Bajaj’s account.
Capex – This year we expect capex of ~60crs and don’t foresee anything significant over next two years. To meet demand from Bajaj, we would be spending 15-20crs in Pune and xxx (one more plant) and there we could generate 60-70crs of additional revenue due to this expansion.
Per vehicle contribution - with Bajaj ranges from INR 800 to 2500 currently on different model and expect it to increase further going ahead
Defense JV – we ceased management control and handed over the control to our JV partner
Product wise
Seat metal business - Business is expected to improve due to growth of Bajaj auto. We had added two new product in 3/4Q last year and now seeing traction for these products. These products would add to the topline. Management expects to clock 130-150crs and expect to grow in line with market growth from FY20 onwards.
Gear Shifter – Company currently has 70-75% market share. Growth was ~8%. Growth was subdued because Toyota used manual gears in new car. Also new Maruti plant in Gujarat has cars running on manual gears. Since manual gears have lower selling price hence topline also was lower despite increase in volume. However, management expects at early double digit growth in FY19. We are also targeting export market in Gear shifter for our existing customers.
After Market sales - In next 3 years we expect to double our sales. As a strategy we are expanding our products pipeline and have both frontend and backend strategy. Currently we have 7 products in after market and want to fully optimise market shares before we start launching new products. We have strengthened supply chains. Commit investments for development of our products. One of the participant had some scuttlebutt and said Lumax is clearly gaining more shelf space.
Acquisition of new business in SMT – This acquisition is directly linked to LED in auto space. Our customer remains Lumax Industries. We have started supplying to Activa through Lumax Industries from Feb 2018. Expects margins to be in mid double digits like margins in after market sales margins.
Oxygen sensors - This division will come in play for BS-VI in FY20. This is done for 2W market. We already have order book with 1 customer and 2 is still under approval. This will be aligned with customers launches.
EV - We are developing a product for Bajaj auto in EV space. We have great partnership with them and will develop products for them in future. We are evaluating product lines where regulations are governing and looking for growth in this segment.