The shares of Lumax AutoTechnologies Limited gained as much as 10 percent in the early hours of Monday and were trading at Rs 239 levels after the company announced an acquisition and its quarterly results.
The company has signed an agreement to acquire a majority stake in IAC International Automotive India Private Limited from the International Automotive Components Group.
The IAC Group is an automotive interior and exterior systems and components supplier to leading automotive OEMs across the world and operates 45 manufacturing facilities across 17 countries.
Lumax Auto Technologies Limited, part of Lumax and D.K Jain group has a diversified range of products catering to two, three, and four-wheeler segments. It is one of the market leaders in the manufacturing of automotive components. Some of its clientele includes names such as Mahindra, Maruti Suzuki, Volkswagen, and Volvo Eicher Commercial Vehicles.
In the third quarter of FY23, the company reported a total revenue of Rs 445 Crore which increased by 4 percent YoY from Rs 428 Crore. Their net profit in the period stood at Rs 28 Crore which increased marginally from Rs 25 Crore in the same period a year ago.
The small-cap auto ancillary company has a market capitalization of Rs 1,646 Crore and a dividend yield of 1.45%. In addition to that, the stock remains undervalued in the market as its TTM PE is at 17.28 while the industry average is 29.47.
Sharekhan is bullish on Lumax Auto Technologies and has recommended a ‘Buy’ rating on the stock with a target price of Rs 288 per share which represents an upside of 21% from the current levels.
The management has guided for strong double-digit growth in FY24 with expansion in EBITDA margins. The stock trades at a 10.8x P/E multiple and 5.5x EV/EBITDA on FY2025E estimates. A shift in business mix towards four-wheelers would augur well for profitability, the brokerage said.
Written by Anoushka Roy
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