Very strong results by Lumax auto technologies in Q1 again
revenue grew 27% YOY on a consolidated Basis
PBT rose by 68 % YOY
PAT rose by 67 % yoy
EDITDA at 32.3cr vs 20.17 cr YOY
EBITDA margins stood at 9.7 yoy vs 7.7 Yoy
Very strong results by Lumax auto technologies in Q1 again
revenue grew 27% YOY on a consolidated Basis
PBT rose by 68 % YOY
PAT rose by 67 % yoy
EDITDA at 32.3cr vs 20.17 cr YOY
EBITDA margins stood at 9.7 yoy vs 7.7 Yoy
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.
Excellent results QoQ and YoY.
Very very strong set of numbers. This company has been very very steady in earnings.It will be a true compounder and rerating is much awaited,
Lumax Auto Tech recently sold its PCB unit to Lumax Industries. The PCB business had seen improvement of sales by 70%, contributed more than 10% of group sales, had higher EBITDA margins than group average, and contributed 21cr of EBITDA. Despite significant growth the decision to close the business and sell the assets for 22cr, for roughy 1x EBITDA multiple was made. As per the management this was done to address customer concerns (a large OEM) because of recurrence of certain quality control issues at Lumax Auto Tech in the PCB unit. Stanley Electric, one of the promoter shareholders in Lumax Industries, agreed to help provided the business was moved into Lumax Industries. Grateful for inputs from members on whether this could be a plausible reason or the sale appears to be a “value transfer” and a minority unfriendly move?
Hey @ayushmit, do you still track this? It seems valuations are coming close to the 2013 levels when you first wrote about it (~1 P/book), only difference this time is the slightly higher debt on the balance sheet. A business which generates ROEs in excess of cost of capital should trade at a premium to their book. Thoughts?
Not sure if anyone is tracking this company of late. Want to highlight some interesting developments in last 6 months –
Comparison of key metrics over last 3-4 years
FY 17 | FY 18 | FY 19 | FY 20 | FY 21 | TTM | ||
---|---|---|---|---|---|---|---|
Sales | 965 | 1013 | 1187 | 1141 | 1108 | 1297 | |
No. of Plants | 27 | 27 | 29 | 29 | 33 | ||
No of JVs | 8 | 8 | 8 | 9 | 9 | ||
Margins | OPM | 8% | 9% | 9% | 8% | 9% | 10% |
CFO | CFO | 64 | 95 | 56 | 76 | 98 | |
CFO / EBITDA conversion | 88% | 109% | 52% | 84% | 100% | ||
Valuations | M Cap / Sales | 0.77 | 1.15 | 0.60 | 0.44 | 0.93 | 0.72 |
PE | 19 | 21 | 13 | 11 | 23 | 15 | |
ROCE | 17% | 20% | 21% | 15% | 14% | ||
Contribution of After market (higher margin biz) | 15% | 15% | 17% | 18% | 20% |
• Robust CFO and healthy conversion ratio
• Contribution of after market is growing steadily from 15% to 20% - company intends to double the revenue from after market in next 2-3 years. Thereby should also improve margin profile
• Valuations: seems to be similar to the valuations trading in FY 17
• Company has guided to outperform the industry. (SIAM estimates industry to grow at 14 to 15% while company is confident of growing at 20%+ - covered below in the key notes from the Q1 call.
Key points from the Q1 call –
Business update
EV space – will take some time unless EV is able to penetrate in wider 2 wheeler mkt. No component is at risk owing to EV segment making inroads
Strategy of electronic & plastic - will help in some of the 2-wheeler EV models
Gear shifter business-
125 cr of revenue in last FY. Expecting good traction in this FY. Manual transmission (MT) - per vehicle realization is 350 to 500 Rs, depending on the model. Technology is changing towards AT. Expect 3x to 5x increase in revenue in the segment, as we move towards the Automatic AT technology . AT is only about 20% of the portfolio. 80% is Manual. So good headroom for growth
Urea tank – Lumax Cornaglia is the only segment that showed a growth in last FY despite Q1 being a washout. Has a good order book & looking at promising growth in coming years
Aftermarket
Alps Alpine JV
Alps Alpine Is a global player - 8-billion-dollar revenue. This will be one of the key cornerstone JVs for the future of company. This would probably the largest JV partner in terms of revenue. Product category is very futuristic.
Company is fundamentally going to focus on sensorization & electronification. In which Alps Alpine is a leader globally. They manufacture components which cater to this product line. Product category is mainly electric components.
Conducting feasibility study currently. Scalability of this JV will be much faster – as compared other JVs in the past. Already in talks with Maruti Suzuki.
Outlook on JVs & revenue contribution form JV
JV of subsidiaries contribute 20% of consolidated revenue. In next 3 to 4 years – JV & subsidiaries will garner 33% of total revenue.
Majority of the revenue from JVs is highly localized. There is no high dependability on import content. Most of them fully manufactured locally.
New order wins of 120 Cr this qtr
Electronic & plastics continue to be main foray
**Outlook for this FY –**Given the performance of last 45 days, if similar momentum were to continue – gave guidance of outperforming the industry.
SIAM estimates industry likely to grow at 15 to 18% full year. Has track record of beating industry growth - so hopeful of 20%+ growth in current year but can throw more light at the end of Q2
Export space
Exports continues to be a key focus area In the long term strategy. Through most of the JV partners, company is looking to utilize India’s production base for some of global plant requirements & derive some cost advantage. Looking to start exports through partners. Case in focus would be Lumax Mannoh (which has mkt leadership in domestic mkt). Some inroads made already through Cornaglia in Indonesia too.
Gross margin – While pricing pressure has impacted gross margin for OEM and other players, Lumax sequentially – has improved gross margin. Have been maintained around 32-33% mark. Have seen some escalation in raw material side. Don’t see any pressure on Gross margin as most of the OEM do compensate the company for the escalation in raw material.
Acquisition of majority stake in IAC India business
Key highlights
Q3FY24 results - https://www.bseindia.com/xml-data/corpfiling/AttachLive/4a93bd5d-47c7-46ad-8f3f-cc4704d5b74b.pdf
Q3FY24 earnings call recording - https://www.youtube.com/watch?v=tckyTAbLC4A
Sales have grown 65% YoY and OPM have expanded to 14%
Q2FY24 concall management had indicated the following
The total order book of Lumax Auto Technologies Limited is reported to be INR 1050 crores, with 93% of this being new business. The electric vehicle (EV) segment contributes to 40% of the total order book value.
Breakdown and Realization:
Some of the notable joint ventures other than IAC and their orderbook
Q3FY24 concall highlights:
Growth in the two-wheeler segment has been buoyed by the festive season and weddings, contributing to an uptick in demand. Nevertheless, Lumax’s standalone business for frame and plastic components has experienced a decline, attributed to weaker demand for Platina and CT models, witnessing a 15% and 40% decrease in demand, respectively. Despite this downturn, Lumax, as the exclusive supplier for certain components, reports robust demand in the premium bike segment. Lumax is strategically aiming to expand its share of the customer’s wallet by enhancing the value of its offerings, including the addition of paint or coating services for the chassis of these premium bikes. The company already boasts a partnership with KTM and supplies components for some of Bajaj’s electric vehicle (EV) variants. Efforts are underway to extend its supply chain to include the Pulsar platform, indicating Lumax’s commitment to diversifying its product line and capitalizing on new opportunities within the evolving two-wheeler market.
The tailwind in the auto sector are
a. Increased safety norms - e.g Bharat NCAP which will benefit large Tier 1
b. Emission norms.
The order book remains at 1100 Cr (IAC Orderbook being 600 - 650 Cr) and is expected to realise 50% by FY25 and 30% by FY 26.
40% of the orderbook is from EV - Mahindra Born electric and Bajaj EV.
The company expects a topline growth of 25% in FY25 driven by the JVs and IAC India.
chart also looks great with consolidation ongoing for the last 6 months and volumes are high as well.
disclaimer : Tracking, reading the company and updating this post on the go.
Keen to restart this thread on Lumax Auto . My understanding is that it one of the rare good Auto OEMs still available at reasonable valuations . Any Views pls
Sure
Lumax Auto Q4
Revenue at 757Cr vs 493 Cr YoY - excellent , QoQ flattish 3.4% up
PAT at 51Cr vs 23Cr YoY
OCF 226Cr vs 146Cr YoY
Registered certain FVOCI loss on finanial asset of 3.84Cr
Good dividend 5.5Rs /share , 275% on face value
Margin down sequentially but IAC was margin accreditive business so that’s disappointing . Not happy with the dividend payout being so high despite debt being high - let’s discuss futher after con call
Q4FY24 concall
corporate structure of Lumax
[quote=“GourabPaul, post:49, topic:296, full:true”]Q3FY24 earnings call recording - https://www.youtube.com/watch?v=tckyTAbLC4A
Sales have grown 65% YoY and OPM have expanded to 14%
Q2FY24 concall management had indicated the following
The total order book of Lumax Auto Technologies Limited is reported to be INR 1050 crores, with 93% of this being new business. The electric vehicle (EV) segment contributes to 40% of the total order book value.
Breakdown and Realization:
Some of the notable joint ventures other than IAC and their orderbook
Q3FY24 concall highlights:
Growth in the two-wheeler segment has been buoyed by the festive season and weddings, contributing to an uptick in demand. Nevertheless, Lumax’s standalone business for frame and plastic components has experienced a decline, attributed to weaker demand for Platina and CT models, witnessing a 15% and 40% decrease in demand, respectively. Despite this downturn, Lumax, as the exclusive supplier for certain components, reports robust demand in the premium bike segment. Lumax is strategically aiming to expand its share of the customer’s wallet by enhancing the value of its offerings, including the addition of paint or coating services for the chassis of these premium bikes. The company already boasts a partnership with KTM and supplies components for some of Bajaj’s electric vehicle (EV) variants. Efforts are underway to extend its supply chain to include the Pulsar platform, indicating Lumax’s commitment to diversifying its product line and capitalizing on new opportunities within the evolving two-wheeler market.
The tailwind in the auto sector are
a. Increased safety norms - e.g Bharat NCAP which will benefit large Tier 1
b. Emission norms.
The order book remains at 1100 Cr (IAC Orderbook being 600 - 650 Cr) and is expected to realise 50% by FY25 and 30% by FY 26.
40% of the orderbook is from EV - Mahindra Born electric and Bajaj EV.
The company expects a topline growth of 25% in FY25 driven by the JVs and IAC India.
chart also looks great with consolidation ongoing for the last 6 months and volumes are high as well.
disclaimer : Tracking, reading the company and updating this post on the go.
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Disclaimer - Invested
LATL Q1 Financial.pdf (5.4 MB)
LATL Q1.pdf (3.8 MB)
IAC International .Automotive India Private Limited: The Company will provide a Corporate Guarantee in lieu of the existing Corporate Guarantee to secure the refinancing of the loan provided / to be provided by Banks/ Non Banking Financial Companies (NBFCs)/ Financial Institutions to IAC up to a maximum amount of Rs. 250 Crores.
To seek approval of the Shareholders with respect to the enhancement of limits for giving loan, guarantees, providing securities and making investments by the Company under Section 186 of the Companies Act, 2013 for an amount of Rs.1,000 Crores (Rupees One Thousand Crores only), as recommended by the Audit Committee.
will see , if any update on concall