Release Date: November 14, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Lumax Industries Ltd (BOM:517206) reported a 26% year-on-year growth in quarterly revenues, indicating strong performance.

• The company has a robust order book of approximately 2,900 crores, with 87% dedicated to LED lighting, showcasing a strong market position.

• There is a positive outlook for the two-wheeler segment, driven by rising rural demand and government support for electric vehicles.

• The company has successfully expanded its wallet share with existing models and customers, securing participation in new model launches.

• Lumax Industries Ltd (BOM:517206) is well-positioned to benefit from advancements in automotive lighting technologies, aligning with safety and regulatory standards.

Negative Points

• The company faced challenges in the passenger vehicle segment, with a low single-digit growth expectation for the full year.

• EBITDA margin for Q2 FY25 stood at 7.7%, a decrease from the previous year, impacted by losses in the cooling business.

• There are concerns about the slow pace of growth in the commercial vehicle segment, with short-term challenges persisting.

• The company is experiencing lower capacity utilization in some plants, affecting profitability.

• There are headwinds in the passenger vehicle market, with potential inventory corrections at the OEM levels expected in the near term.

Q & A Highlights

• Warning! GuruFocus has detected 3 Warning Signs with BOM:517206.

Q: Could you provide an update on the current operational status of the second plant? A: The plant is operating at 55-60% capacity utilization for phase one, primarily serving Mahindra and Mahindra, and Tata Motors. We expect capacity utilization to increase to 80% next financial year with significant orders from Tata, Volkswagen, and Mahindra. (Respondent: Unidentified_5)

Q: Can we expect margin improvement in the remaining half of this year given that 87% of our order book is towards LED? A: While 87% of the order book is LED, only 30% will contribute to revenue in FY25. We expect margin expansion next year, surpassing 10% operating EBITDA margins due to higher LED penetration and operational efficiencies. (Respondent: Unidentified_5)

Q: What is the outlook for growth in the second half of this year? A: We expect a 15-20% growth for the full year FY25, with a stronger growth momentum anticipated in FY26, potentially upwards of 20%, driven by new model launches and increased capacity utilization. (Respondent: Unidentified_5)