LUMAXIND - Lumax Industries Ltd. Share Price

Here are the major questions and detailed answers from the Q&A section of the Lumax Industries' Q2 FY2025-26 earnings call transcript:

Question 1: "What are the steps that we are looking at to improve the margins and what would be our target in the near term to reach a specific margin level?"

Answer: "Currently, our margins should have been around 9.7%-9.8% this quarter. The FX fluctuations impacted this. Last year, we closed at 8.5%. Our focus is on achieving double-digit margins this year and targeting 12%-13% over the next 2-3 years as we improve efficiency and leverage new technologies."

Question 2: "Would the revised revenue growth guidance of 20%-25% be limited to FY'26, or do we see FY'27 and FY'28 also benefiting from the GST cut?"

Answer: "For FY'27, we expect growth to mirror FY'26's guidance. With a robust order book, we're maintaining a long-term CAGR of 15%-20%. The immediate focus remains on delivering the 20%-25% growth for FY'26 and FY'27."

Question 3: "Are we seeing traction in the small car segment, and could that affect our product mix?"

Answer: "The small car segment shows signs of revival, but it's early to determine sustainability. While production may rise, it's uncertain how dramatically our product mix would be affected, hence we will monitor the situation closely."

Question 4: "Can you elaborate on the new plant's CAPEX and the debt management with the increased guidance?"

Answer: "The new plant is part of our existing order book. We aim to maintain no new long-term debts, allowing gradual reduction in existing debt as we fund the CAPEX through internal accruals."

Question 5: "What are your thoughts on the competitive intensity in bidding and how does Lumax position itself against competitors?"

Answer: "The competitive intensity is high, but Lumax benefits from strong engineering capabilities and localized technology solutions. Future differentiation will hinge more on technological innovation rather than just production price."

Question 6: "What is the plan for localization of LED components and what is the current localization level?"

Answer: "Currently, localization is around 25%-30%. We're looking to enhance this to 50%-60% in the future as we explore localizing entire LED modules, while some electronic components have already been localized."

Question 7: "How is Lumax addressing the concentration risk with top customers contributing 79% of revenues?"

Answer: "We cater to major OEMs across segments, which helps mitigate risk. However, we are actively working to expand our share among other clients to reduce dependency on existing top customers over time."

These responses encapsulate the key insights from the Q&A section within the character limit requested, focusing on the company's operational outlook and strategic directions.