Lumax Auto Technologies’ order book supports growth in higher-value automotive content

Investment View and Valuation

ICICI Securities maintains a BUY rating on Lumax Auto Technologies, supported by its strong position in passenger-vehicle ancillaries, expansion into higher-value automotive content, healthy order book and marquee customer base. The broker values the company at Rs 2,450, based on 34x FY28E P/E, compared with the report CMP of Rs 2,075.

ICICI Securities expects sales and PAT to compound at 20 per cent and 32.7 per cent, respectively, over FY26-FY28E. EBITDA margin is expected to reach approximately 14.5 per cent in FY28E.

Robust Q1 FY27 Performance

Lumax Auto Technologies reported strong consolidated Q1 FY27 results. Total operating income increased 32.9 per cent year-on-year to Rs 1,363.6 crore, although it declined 3.8 per cent sequentially. EBITDA rose 52.3 per cent year-on-year to Rs 190.2 crore, with EBITDA margin expanding 178 basis points year-on-year to 13.9 per cent. Sequentially, EBITDA margin declined by 39 basis points. Reported PAT increased 109.2 per cent year-on-year to Rs 86.6 crore, while declining 1.7 per cent sequentially.

Passenger vehicles contributed approximately 52 per cent of Q1 FY27 sales. The IAC India acquisition, now a wholly owned subsidiary, has strengthened Lumax Auto Technologies’ plastic-interior-module portfolio and expanded its relationship with OEMs, including Mahindra & Mahindra.

Order Book Supports Medium-Term Growth

Management indicated that the Rs 1,600 crore order book provides medium-term revenue visibility. Approximately 24 per cent of the order book is expected to be executed in FY27, 56 per cent in FY28 and the remaining 20 per cent in FY29.

Advanced Plastics forms the largest share of the order book, followed by Mechatronics, Alternate Fuels, and Structures and Control Systems. Management clarified that the order book represents annualised incremental revenue visibility over the base business. Consequently, ICICI Securities has raised its FY26-FY28E revenue CAGR assumption to 20 per cent from 15 per cent previously.

The broker also highlights additional business opportunities from Mahindra & Mahindra, Maruti Suzuki and Bajaj Auto. Maruti Suzuki revenue grew 48 per cent year-on-year in Q1 FY27 across product verticals, while Bajaj Auto’s Chetak platform remains a growth opportunity for the lighting and frame businesses.

Mechatronics: Structural Growth Driver

Mechatronics is a central structural growth driver in the report. Q1 FY27 revenue increased approximately 56 per cent year-on-year, from Rs 54 crore to Rs 84 crore, while the division’s order book reached nearly Rs 500 crore.

Management expects Mechatronics revenue of around Rs 400 crore in FY27 and has an ambition to reach approximately Rs 1,000 crore by FY30-FY31. The division covers switches, sensors, antennas and telematics, and has entered advanced ECUs through the launch of a Body Control Module.

Around 22 additional sub-product categories are under evaluation through proof-of-concepts, requests for quotation or R&D. Management is also developing ADAS, connectivity and vehicle-to-everything capabilities through the SHIFT centre. It is at an advanced stage on an ADAS opportunity with a major OEM and is finalising connectivity-solution orders with India’s top four commercial-vehicle OEMs, with launches expected by the end of Q3.

Financial Forecasts

Key Risks

• Client concentration: The top two customers account for more than 40 per cent of revenue.
• Margin risk: Margin gains may be lower than anticipated amid volatile raw-material prices.