CD Equisearch Pvt Ltd June 23, 2016 Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance Lumax Industries Ltd. No. of shares (m) 9.35 Mkt cap (Rs crs/$m) 658//97.4 Current price (Rs/$) 704/104.2 Price target (Rs/$) 884/13.1 52 W H/L (Rs.) 744/280 Book Value (Rs/$) 287.1/4.2 Beta 1.1 Daily volume (avg. monthly) 61460 P/BV (FY17e/18e) 2.1/1.9 EV/EBITDA (FY17e/18e) 7.6/6.9 P/E (FY17e/18e) 11.2/9.6 EPS growth (FY17e/18e) 12.9/17.2 OPM (FY16/17e/18e) 7.1/7.1/7.1 ROE (FY17e/18e) 20.3/20.7 ROCE (FY17e/18e) 13.7/14.2 D/E ratio (FY17e/18e) 0.3/0.3 BSE Code 517206 NSE Code LUMAXIND Bloomberg LUMX IN Reuters LUMA.BO Shareholding pattern % Promoters 73.6 MFs / Banks / FIs 0.1 FIIs 1.6 Govt. Holding 0.0 Public & Others 24.7 Total 100.0 As on March 31, 2016 Recommendation BUY Phone: + 91 (33) 4488 0055 E- mail: [email protected]Figures (Rs crs) FY16 FY17e FY18e Income from Operations 1255.18 1380.69 1518.76 Other Income 3.88 3.77 3.90 EBITDA (other income included) 92.43 101.80 111.73 Net Profit after associate profit & EO 52.03 58.74 68.83 EPS (Rs) 55.66 62.84 73.63 EPS growth (%) - 12.9 17.2 Equity 9.35 9.35 9.35 Company Brief Lumax Industries Ltd is a leading provider of high quality automobile lighting systems and solutions, which include stellar quality lamps and other related products. It has a more than three decades old technical and financial collaboration with Stanley of Japan (which holds 37.5% stake in the company), a world leader in vehicle lighting and illumination products for automobiles. Quarterly Highlights Lumax registered a modest growth of 4.1% in Q4FY16 y-o-y in its revenue at Rs 323.22 crores ($47.8 m) compared to Rs 310.40 crores ($45.9 m) in Q4FY15. Largely due to weak dispatches of India’s two & three wheeler vehicles, it reported sub 10% growth in revenues to Rs 1255.18 crores ($185.8m) last fiscal compared to Rs 1142.56 crores ($169.1 m) in the same period a year before. Yet early signs of cyclical turnaround in passenger and commercial vehicle sales bode well for the company. Fall in the raw material costs as a % to sales (66.6% in Q4FY16 vs 71.1% in Q4FY15) and increase in the productivity levels expanded the operating margins by 276 bps to 6.7% (3.9% in Q4FY15). The EBITDA also saw a remarkable growth of 72.7% (Rs 22.84 crs vs 13.23 crs) in the last quarter, buttressed by cost reduction initiatives and technological upgradation. More gains are expected as the upcoming design centre in Taiwan will further optimize the cost of production. Profit after tax in Q4FY16 stood at Rs 10.34 crores ($1.5m) compared to Rs 2.43 crores ($0.4m) in the same quarter of the previous year registering a massive growth of 324.7% which was backed by higher margins and reduction in interest costs. The net profit margin reported in the last quarter jumped by 242 bps to 3.2% (0.8% in Q4FY15). PAT last fiscal stood at Rs 37.37 crores ($5.5m) compared to Rs 16.54 crores ($2.5m) in the year ago period. The stock currently trades at 11.2x FY17e EPS of Rs 62.84 and 9.6x FY18e EPS of Rs 73.63. Galvanized by stable margins and technology upgradation initiatives, earnings would advance by 15% on average over the next two years. Low volume base of the Indian automobile sector shifts odds in favour of value minded investors. Needless to mention sourcing benefits arising out of the new design centre in Taiwan. Weighing all odds, we retain our ‘buy’ rating on the stock with a revised target of Rs 884 (previous target Rs 625) based on 12x FY18 earnings.
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CD Equisearch Pvt Ltd June 23, 2016
Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance
*figures in crores, all figures on ttm basis Although the companies presented in the exhibit above belong to the auto ancillary industry space yet they are not fully comparable due to variation in products manufactured.
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Financials
Quarterly Results- Standalone Figures in Rs crores
Q4FY16 Q4FY15 % chg FY16 FY15 % chg
Revenue From Operations 323.21 310.40 4.1 1255.18 1142.56 9.9
Other Income 1.35 1.15 17.3 4.38 5.56 -21.2
Total Income 324.56 311.55 4.2 1259.55 1148.12 9.7
Total Expenditure 301.73 298.32 1.1 1166.62 1083.25 7.7
EBITDA (other income incl.) 22.83 13.23 72.6 92.93 64.87 43.3
Interest 3.67 4.09 -10.3 13.44 14.43 -6.9
Depreciation 9.66 7.50 28.9 37.90 36.16 4.8
PBT 9.50 1.64 480.9 41.59 14.28 191.3
Tax -0.84 -0.80 5.2 4.22 -2.30 -283.4
PAT 10.34 2.43 324.7 37.37 16.58 125.5
Extraordinary Item - - - - 0.04 -
Adjusted Net Profit 10.34 2.43 324.7 37.37 16.54 126.0
EPS 11.06 2.60 324.7 39.98 17.69 126.0
Consolidated Income Statement Figures in Rs crores
FY16 FY17e FY18e
Revenue From Operations 1255.18 1380.69 1518.76
Other Income 3.88 3.77 3.90
Total Income 1259.06 1384.46 1522.66
Total Expenditure 1166.62 1282.66 1410.93
EBITDA (other income included) 92.43 101.80 111.73
Interest 13.44 11.24 10.20
Depreciation 37.90 40.18 42.73
PBT 41.10 50.38 58.80
Tax 4.22 5.19 6.06
PAT 36.88 45.19 52.74
Profit from Associate 15.15 13.54 16.09
Adjusted Net Profit 52.03 58.74 68.83
EPS (Rs) 55.66 62.84 73.63
Equity Capital 9.35 9.35 9.35
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Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance
Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance
Key Financial Ratios
FY17e FY18e
Growth Ratios (%)
Revenue 10.0 10.0
EBITDA 10.1 9.8
Net Profit 12.9 17.2
EPS 12.9 17.2
Margins (%)
Operating Profit Margin 7.1 7.1
Gross profit Margin 6.6 6.7
Net Profit Margin 4.3 4.5
Return (%)
ROCE 13.7 14.2
ROE 20.3 20.7
Valuations
Market Cap/ Sales 0.5 0.4
EV/EBITDA 7.6 6.9
P/E 11.2 9.6
P/BV 2.1 1.9
Other Ratios
Interest Coverage 5.5 6.8
Debt Equity 0.3 0.3
Current Ratio 0.7 0.7
Turnover Ratios
Fixed Asset Turnover 3.3 3.6
Total Asset Turnover 4.6 4.5
Debtors Turnover 7.2 7.2
Inventory Turnover 11.7 11.7
Creditor Turnover 4.1 4.2
WC Ratios
Debtor Days 50.5 51.0
Inventory Days 31.2 31.2
Creditor Days 90.0 86.3
Cash Conversion Cycle -8.3 -4.1
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Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance
Financial Summary – US dollar denominated
million $ FY16 FY17e FY18e
Equity capital 1.4 1.4 1.4
Shareholders funds 40.5 45.8 52.6
Total debt 18.2 15.7 14.4
Net fixed assets (including CWIP) 64.1 64.1 65.9
Investments 10.4 12.1 14.4
Net current assets -29.1 -27.1 -25.4
Total assets 42.1 46.6 53.1
Revenues 191.7 204.4 224.8
EBITDA 14.1 15.1 16.5
EBDT 12.1 13.4 15.0
PBT 6.3 7.5 8.7
PAT 7.9 8.7 10.2
EPS($) 0.85 0.93 1.09
Book value ($) 4.3 4.9 5.6
Income statement figures translated at average rates; balance sheet at year end rates; projections at current rates All dollar denominated figures are adjusted for extraordinary items.
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Equities Derivatives Commodities Distribution of Mutual Funds Distribution of Life Insurance
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