Amar Ambani’s Stock Pick Lumax Auto Tech Gives 50% Gain In 10 Weeks. Daljeet Kohli Sees More Upside From It

Auto ancillary stocks have become very popular amongst savvy investors. Amar Ambani of IIFL has recommended stocks like LG Balkrishna, Banco Products, MM Forgings, Phoenix Lamps etc.

Nandita Agarwal Parkar of Karma Capital bought a truck load of Rico Auto.

Sushil Finance put a buy on Minda Industries and sent the stock rocketing skywards.

Daljeet Kohli has now joined the party. He earlier recommended Exide Industries. His latest stock pick is Lumax Auto Technologies.

Lumax Auto Tech was first recommended by Amar Ambani on 2nd September 2014 as an “express idea”. The market price was Rs. 200 and he promised huge gains on the premise that the company would be a big beneficiary of domestic auto demand revival.

At the CMP of Rs. 297, we are looking at gains of nearly 50% in just about 10 weeks.

Daljeet’s Kohli’s latest report promises more upside from Lumax Auto Tech. Lets note the core reasoning:

“Lumax Auto Technologies (LATL) is a supplier of key components 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. In spite of weak environment for auto OEMs, LATL’s revenues stayed flattish in the past couple of years. However, EBIT margin weakened due to impact of higher depreciation and interest costs related to new plants . From here on we expect strong volume growth coupled with margin expansion in the next couple of years. With comfortable D/E of 0.2x and robust ROCE of 17%+, we find current valuations attractive, hence we recommend to BUY LATL with target price of Rs. 352 (10xFY16e EPS).”

Daljeet also gave an interview to ET where he reiterated that one of his top picks is Exide Industries, which has given good results. He also stated that he had added Lumax Auto Technologies Ltd. He explained that Lumax is an ancillary which makes rear view mirrors and gears and many parts of auto ancillary, which are mainly supplied to two wheelers. Lumax has a subsidiary which also does work for four wheelers. The company has around 10 plants spread across India, three of them are in Pune, Noida, and various other places. So they are close to the locations and close to the actual auto majors there.