Multi Baggers

A market leader in the manufacture of automotive components, the Lumax - D.K. Jain Group has over 70 of experience. With 9,000 plus employees spread over 27 manufacturing facilities across 8 states it operates through 14 entities. Co has 3 Government-certified R&D centres, a design centre in Taiwan. Co’s product portfolio consist of 2- wheeler lighting, 2-wheeler chassis, electrical & electronics components, gear shifters ,intake system, integerated plastic modules .oxygen sensors, seat structures & mechanisms, telematics products & services, aerospace & defence engineering services.

In future, lighter vehicles with lower emissions will be the preferred norm. Urea tanks, which will be mandatory for all diesel vehicles, post 2020, have been identified as a new product line with the potential to contribute significantly to the revenue and profitability targets identified. Swing arm and Trailing arm supplies are initiated from the Aurangabad plant. Co had established two (2) Joint Ventures with Fransisco Albero S.A.U (FAE) Spain and Ituran Location and Control Limited Israel. As the Country takes a leap from BS-IV to BS-VI emission norms, the huge demand for Oxygen Sensors is projected. Thus, with a futuristic vision and much before the mandatory enforcement of BS-VI, a Joint Venture with Francisco Albero S.A.U. (FAE), Spain was entered into to manufacture and supply Oxygen Sensors for Two-Wheeler Industry. The product is expected to significantly enhance the fuel efficiency of a vehicle and shall play a critical role in aligning with the BS-VI emission norms. During the year under review the Company with its existing products basket has bagged orders for new product launches by various OEM’s such as Eicher, Honda, Nissan and Bajaj Auto etc. The Company continues to drive growth to diversified product and added new product such as Trailing Arm and Swing Arm in two wheeler segment & received business, for same from Bajaj Auto Limited.

Co’s Q1FY19 financial performance was robust with bottomline of company posting stellar growth of more than 95 % at Rs 18.06 cr against Rs 9.17 Cr in Q1FY18.Operating profit of company has registered growth of 65% during the same qtr while topline of company increase by decent growth of 27% in Q1FY19 against Q1FY18.Co’s Q1FY19 EPS was shoot up sharply by more than 95% at Rs 2.65 v/s Rs 1.34 in Q1FY18.

The company is currently trading at 22.30x of TTM EPS FY19 at Rs 8.46 while it is trading at 18.94x of FY19E eps & 15.65x of FY20E eps. Co’s balance sheet remains healthy with little debt and a robust working capital management cycle. With a recovery in OEM demand, acquisition of new clients, healthy growth in value-added products & improvement in overall margins, company is expected to have better growth in its financials in the coming years. Hence, we recommend “Buy” on the stock with price target of Rs 245 for long term horizon.

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