Key Highlights of the 3QFY26 Result
Outperformance over industry continues, company again raises growth guidance: Lumax Auto Tech Ltd (LATL) reported Revenue/EBITDA/PAT growth of 40%/49%/116% YoY during 3QFY26. PAT was boosted by one-time deferred tax gain of Rs 39 cr on account of merger of GreenFuel Energy with the SPV through which the company was acquired. Looking at the robust growth for LATL during 9MFY26, the management again raised the FY26E revenue growth guidance to 30% from 25% announced at the end of 2QFY26. The guidance was previously raised to 25% post 2Q from 20% announced at the start of FY26E. The EBITDA margin improvement continued with 3QFY26 margin at 13.8%, up 80bps YoY/40bps QoQ. EBITDA margin is expected to structurally improve to 20% over the next 5 years driven by operational efficiencies, expanding portfolio of high margin components and presence in OEM programs creating high entry barriers.
Key Growth Drivers: The 2 acquired subsidiaries – IAC India and GreenFuel Energy continue to drive growth for LATL. IAC’s revenue for 9MFY26 has risen 40% YoY led by premiumization in the cabin interiors of passenger cars. IAC has secured new orders from Maruti Suzuki including that for its recently launched SUV ‘Victoris’ besides M&M where it will supply to the new XUV 7XO besides the 2 BEVs – BE6 and XEV 9E. It is also in the process of adding other EV customers. The CNG component business under GreenFuel Energy continues to grow sequentially. The company is focusing on import substitution for the OEMs with a potential doubling of content per vehicle from Rs 3,200 currently to Rs 6,700.
Key OEM performance during 3QFY26: LATL’srevenue from M&M grew 15% YoY during 3QFY26. Growth rate was lower than the high double digit run rate due to the phasing out of the XUV 700 by M&M ahead of the launch of XUV 7XO. Growth is expected to bounce back in 4QFY26 as the XUV 7XO scales up production. Recovery in 2W export volumes for Bajaj Auto led to 22% YoY growth for revenue from Bajaj Auto. Integration of GreenFuel Energy along with the increase in share of business has led to 88%/110% YoY growth for LATL’s revenue from Maruti Suzuki and Tata Motors respectively.
Maintain BUY – Target Price raised to Rs 2,210
At the current price of Rs 1,626, the stock is currently trading at a P/E of 33.3x/22.1x/16.1x its FY26E/FY27E/FY28E EPS of Rs 48.9/Rs 73.6/Rs 101.1 respectively. We raise our target multiple to 30x FY27E EPS of Rs 73.6 to arrive at our TP of Rs 2,210, thus providing an upside potential of 35.8%. The increase in the target multiple is supported by robust underlying financials, improving return ratios and upcycle in the auto industry which is likely to sustain over the next few years.
