LUMAXIND - Lumax Industries Ltd. Share Price

During the Q3 FY 2025-26 earnings call, Lumax Industries management conveyed a positive outlook amidst a robust performance in the automotive sector. Mr. Deepak Jain highlighted that India's economic growth is bolstered by strong domestic demand, structural reforms, and increased public capital expenditure, which is expected to support sustained growth in the automotive industry.

Management reported record quarterly revenues of INR 1,053 crores, up 18.7% year-on-year, and EBITDA margins improved to 10.6% from 8%. They emphasized that the automotive sector saw record production figures: 14 lakh passenger vehicles (up 19% y-o-y), 68.1 lakh two-wheelers (up 15% y-o-y), and substantial growth in three-wheelers and commercial vehicles.

Looking forward, the company projects capital expenditure of INR 350-400 crores for FY 2026 due to accelerated execution plans, with future revenue growth expected to exceed 20% in FY 2027. The management foresees maintaining a revenue growth of 15% to 20% for the next three to five years, driven by a record order book of INR 1,759 crores, with 60% expected to contribute in FY 2027.

Management also noted a significant push towards LED lighting, with over 61% of revenue currently generated from this segment, and they anticipate the share will continue to grow, aligning with industry trends towards advanced lighting systems. They expressed confidence in achieving EBITDA margins of around 11% to 12% in the next two years, pointing to the synergistic effects of operational efficiencies and new product rollouts to fuel growth and profitability.

Here are the major questions asked during the Q&A section of the earnings conference call, along with detailed answers:

1. Question: "How sustainable is our current EBITDA margin level, and can we expect to reach margins of 12-13% in the future?"

   Answer: We experienced a significant margin increase this quarter, influenced by exceptional tooling profitability. While tooling margins are cyclical, we believe maintaining double-digit EBITDA margins is possible and will aim for 12-13% in the next two years, supported by operational efficiencies and new orders.

2. Question: "What is the outlook for LED penetration and growth drivers in the passenger vehicle segment?"

   Answer: The passenger vehicle segment leads our lighting business, comprising 65% of sales. With increasing LED adoption and our expanding order book, we expect continued growth, propelled by technological advancements and our strong partnerships with major OEMs.

3. Question: "Are we planning to enter ambient lighting and the commercial vehicle space?"

   Answer: While we have one ambient lighting order under development, it's not a core focus. The commercial vehicle segment constitutes 6% of our revenue now, but we anticipate gradual expansion as OEMs evolve. However, passenger vehicles and two-wheelers remain our priority.

4. Question: "What will be the expected revenue and capex for FY 27 and FY 28?"

   Answer: For FY 27, we project a revenue growth of over 20%, supported by our order book. Capex guidance has been revised to INR 350-400 crores for FY 26 and expected to be around INR 100-150 crores for FY 27. In FY 28, we anticipate revenues of INR 450 crores from our Bengaluru facility.

5. Question: "Could you provide insights on the impact of forex fluctuations on our margins?"

   Answer: This quarter showed no significant forex impact. Last quarter, there was a small fluctuation, but overall, we remain stable, allowing us to focus on operational improvements without external currency pressures.

6. Question: "What is the current localization level, and how does it compare to our goals?"

   Answer: Localization has reached 30-35%, with some products above 70%. We aim for 50-60% in the future, particularly through PCB assemblies. Our progress varies by component, with certain items still imported, but we are advancing well overall.

7. Question: "What percentage of our revenue comes from Maruti's export models?"

   Answer: We do not track specific revenue from exports. Our products are used in various Maruti models that are exported, but it's challenging to isolate that data within our overall revenues, which are heavily reliant on the domestic market.

8. Question: "What is the expected EBITDA margin for FY 27 and FY 28?"

   Answer: We're confident about improving EBITDA margins in FY 27, aiming for above current levels. While hard to assign specific numbers now, we anticipate reaching approximately 12% margin in the next two years as we capitalize on operational efficiencies and new products.