Amar Ambani of IIFL spotted Lumax Auto Tech on 2nd September 2014 when it was languishing at Rs. 200. He was quick to realize that auto component stocks had been beaten out of shape in the slowdown and that they had great potential ahead. He immediately rushed off an “Express Idea” buy call and promised a target price of Rs. 245 within 1 to 3 months. He pointed out that there would be a “strong revival” for the auto industry and that Lumax would be the “big beneficiary” thereof.
Well, within just three trading sessions, Lumax Auto crossed the target price of Rs. 245 and gave the promised return of 22.5%.
Surprisingly, Amar Ambani did not enhance the target price. Instead, he announced a “call success/ closure”.
Daljeet Kohli woke up to the potential of Lumax on 21st November 2014 when the stock had surged to Rs. 280. He advised a buy on the basis that the valuations were “attractive” in the context of the strong volume growth expected, the comfortable debt:equity ratio and the robust ROCE of 17%+. Daljeet promised a target price of Rs. 352 for the stock.
Today, just 45 days later, Lumax Auto Tech effortlessly crossed the target price of Rs. 352 set by Daljeet.
The result is that if you had acted on Amar Ambani’s advice, you would be basking in gains of 76% (in about 4 months). If you had acted on Daljeet’s recommendation, you would be sitting on gains of 25% (in 45 days).
Anyway, there is no need to despair if you didn’t act on either recommendation because in the latest Outlook Business magazine, Daljeet has declared Lumax Auto Tech as his stock pick for 2015.
Daljeet has also today issued a detailed research report in which he has explained the entire nitty gritty of the stock and why it is a great buy at present. Let’s pay attention:
“Lumax Auto Technologies (LATL) is a part of D.K. Jain group, engaged into manufacturing of various spare parts for the auto industry. Ever since its inception in 1981 the organization has gone through radical changes and at present serves as a key supplier of several components (includes Head lamp, Tail lamp, Frame Chassis, Adjustor Motor, Handle bar, Mufflers, Gear shift lever, Parking breaks and other small parts) to the two- wheeler and the passenger car industries. Its key customers include Bajaj Auto, Piaggio, Honda Motorcycles and Scooters, Maruti Suzuki, Toyota and Tata Motors. Strong tie-ups with these OEMs will entail large business opportunities in the next few years. We expect company to witness strong volume growth coupled with margin expansion in the next couple of years on the back of revival in automotive demand and value added products. With comfortable debt to equity of just 0.2x & strong ROE of ~22% we believe the company has potential to yield very high returns in next 2-3 years. The company has a consistent dividend track record with dividend payout of above 25%. We find current valuation attractive, hence we recommend to BUY LATL with target price of Rs. 575 (10x FY17E EPS).”
Daljeet’s revised target price is Rs. 575 which means that there is a potential of 61% gains from the CMP of Rs. 356.
Daljeet has also highlighted the risk factors in the stock that we need to pay attention to.
Now, the onus is entirely upon you to carefully ponder over the information and especially the risk factors and take an informed decision in the matter. You must remember that if the stock pick flops, you cannot blame anyone but yourself.
Vijay kedia bought TCPL Packaging. Any view?
Thanks for the info.
Why Daljeet Ji is not updating on Sharon Bio? Many investors are waiting for his update, as they have been trapped after buying Sharon Bio.
sir i have bought jp associates for 76 what to do
Guys,
Is Lumax Auto Tech worth buying at 375?
Bhs
Well many other good stocks in its industry are trading well above PE of 16, as compared to them it might be worth purchase at 375, if it keeps delivering better results there’s no harm in buying.
But if I would have to break my current holdings to invest in new, I would have chosen BGR Energy Systems or Rural Electrification Corporation. I am very positive on their growth.
There are three freaking companies having the name Lumax. I can’t figure out what each one does.
Have you even taken time to read article.
I did read the article Mr. Know All, and I can’t understand what it is that Lumax auto tech makes that Lumax industries could not. Assuming they have the same promoters, why list three companies ?
Well Abi,
I would be smartest man alive if I would be knowing all. Next, I as well as many others like to research a little before we share our opinion. Information doesn’t come from thin air.
As I see you are least bothered about doing little background research yourself, let me enlighten you.
Lumax Industries started as auto lighting systems company, they specialize in providing lighting solutions to all kind of automobiles. Later they expanded.
Lumax Auto Tech provides auto fabrication and performance mobility solution for automobiles.
Whereas Lumax Automotive System is dedicated to exclusive automobile parts.
Now your final question why list 3 companies, well there can be several reasons, business is complicated thing.
Personally I think it was intelligent idea to divide earning ability into performance, product and maintenance based sectors of same industry.
When times are good performance and product based sectors work better. When times are bad maintenance based sectors work better. This ensures earnings in spite of good or bad economic conditions.
That’s what I personally think, what they had in mind, I don’t have any slightest idea.
Just little advise, don’t invest without your own research. Have a nice day.