Lumax Industries Limited (517206) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '27 Earnings Conference Call of Lumax Industries Limited. [Operator Instructions] Please note that this conference is being recorded. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company, which are based on beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and may involve risks and uncertainties that are difficult to predict. I would now like to hand the conference over to Mr. Deepak Jain, Chairman and Managing Director of Lumax Industries Limited. Thank you, and over to you, sir.

A very good morning, everyone. I hope everyone is doing well. Along with me, there is on this call today, Mr. Anmol Jain, the Joint Managing Director of the company; Mr. Sanjay Mehta, Group Chief Financial Officer; Mr. Ravi Teltia, the CFO of the company; Mr. Naval Khanna, the Corporate Head of Taxation; and Mr. Surabhi Chandna, the Group Head of Investor Relations and Value Creation, along with the Investor Relations Adviser, SGA. We updated our financial results and earnings presentation on the stock exchange and the company's website. I hope everybody has had an opportunity to go through the same. The economic environment during the Q1 FY '27 was influenced significantly by the ongoing crisis in West Asia. Its effects were felt across multiple parts of the Indian economy from high crude oil prices to disruptions in shipping and freight movement to periods of rupee volatility. Despite these headwinds, FY '27 began on a strong note on the Indian automotive industry with demand remaining resilient across vehicle segments. Cost and availability pressures on key imported inputs did not meaningfully disrupt production for the Indian automotive sector through the quarter, a testament to the underlying strength of the domestic demand and supply chain discipline across the ecosystem. According to SIAM, during the first quarter, overall, the Indian auto industry production stood at 93.6 lakh units, up 22.2% year-on-year. The passenger vehicle production grew by 17% year-on-year to 14.5 lakh units, driven by sustained demand for utility vehicles, premiumization trends and continued new model launches. The 2-wheeler production increased by 23% to 72.5 lakh units, supported by improving rural demand and easier retail financing. The 3-wheeler production recorded the strongest growth of 39%, reaching 3.6 lakh units, led by healthy replacement demand, growth in last mile mobility and improving urban transportation activity. The commercial vehicle production also remained robust, growing 16% to 3 lakh units, supported by continued infrastructure spending, construction activity and healthy freight movement. The strong production growth across all segments underscores the resilience of the Indian automotive industry. The lower GST rates, improved financing availability, resilient customer confidence and continued export momentum supported demand during the quarter. OEMs have adopted a calibrated approach towards passing the cost increases to customers, encouraged by strong order visibility and a favorable midterm outlook, several OEMs have also announced capacity expansion plans across vehicle segments. This not only reinforces the confidence in the long-term growth trajectory of the industry, but also creates significant opportunities for auto component manufacturers like us to deepen our partnerships, expand product offerings and increase content per vehicle through technology-led and value-added solutions. Speaking on automotive lighting, the nature of the customer demand is evolving. OEMs in India are seeking increasingly advanced lighting solutions while maintaining a sharp emphasis on cost efficiency and local value creation. The key priorities we hear from them today include evolving safety compliance, improved energy efficiency, stronger styling differentiation, deep integration with ADAS and vehicle software and faster development cycles. While cost competitiveness remains important, the conversation has evolved beyond being purely cost driven. At Lumax, we're responding to the shift to a dual-track approach, where program requirements demand rapid to time market or aggressive cost targets, we actively collaborate with leading standard module suppliers. Simultaneously, we are investing in the development of proprietary Lumax standard lighting modules, which are engineered specifically for the Indian market requirements, validated for local operating conditions and manufactured in India. This approach will enable us to balance global technology benchmarks with localization, cost competitiveness and long-term value creation for OEM partners. Now coming to key updates for the company during the quarter. Our consolidated revenue stood at INR 1,223 crores, INR 1,223 crores, making a healthy 32.6% year-on-year growth. EBITDA for the quarter came in at INR 113 crores, up 34% year-on-year and EBITDA margins of 9.2%. During the quarter, we have won orders for multiple products from one of the key 2-wheeler OEMs. Thus order book stands around at INR 2,500 crores with LED lighting composition of approximately 90%. The key launches during the quarter have been in the passenger vehicle segment, the Tata Motors Tiago where we are supplying head lamps and the Volkswagen Taigun, where we are supplying the rear lamps. In the 2-wheeler segment, we have also won an order for Suzuki Motors for Burgman Street for supplying front turning signal lamps. And in commercial vehicles, we have won orders from Force Motors to supply head lamps for Traveller 2. Q1 got recognition from industry bodies and sustainable certifiers across dimensions from LIL operations. The notable awards included the Lumax Group recognized as A Most Preferred Workplace '26-'27 by Marksmen Daily and 5 products each from Bawal, Dharuhera, Haridwar, Pantnagar and Sanand plants have been awarded the GreenPro Ecolabel Certification. From a capacity point of view, our Bengaluru plant expansion to support Maruti and Toyota's upcoming models is progressing satisfactorily and is expected to be commissioned from Q4 of FY '27. We also have a brownfield project underway at Sanand and Bawal to support new order wins with customers at respective locations. Coming to the outlook of the year. As we move into the festive season, demand is expected to remain healthy, although the industry continues to closely monitor commodity prices, input cost inflation and geopolitical developments. Now I will hand over to our CFO, Mr. Ravi Teltia for updates on operational and financial performance.

Thank you, sir. Good morning, everyone. Let me take you through the key highlights of our operational and financial performance for the quarter. Starting with the financials. As CMD mentioned, we delivered strong top line growth this quarter again. Our consolidated revenue stood at INR 1,223 crores, making a healthy 32.6% year-on-year growth. This growth was primarily driven by robust performance in our manufacturing business, where the revenue growth was 36.8% year-on-year to INR 1,160 crores. EBITDA for the quarter came in at INR 113 crores, up from INR 85 crores in Q1 FY '26, reflecting a growth of 34%. EBITDA margin stand at 9.2%, in line with Q1 FY '26 despite external headwinds. There is approximately 120 to 130 bps net impact of commodity and other costs in Q1 FY '27. This is a result of continued focus on cost discipline, operational efficiencies and growing contribution from our premium product portfolio. Moving to the profitability. Our consolidated profit after tax, including share of associates for quarter 1 FY '27 stood at INR 51 crores compared to INR 36 crores in the same quarter last year, registering a growth of 41.2%. PAT margin stood at 4.2%, up 30 basis points year-on-year. The effective tax rate for the quarter stood at 20.3%. Now turning to the operations side. We are seeing strong traction in the LED lighting segment, which continues to be a key growth driver. In Q1 FY '27, LED lighting accounted for 63% of our total revenue, up from 61% in the same quarter last year. Importantly, approximate 90% of our current order book is now LED based, which gives us strong visibility and confidence in further expanding this segment and increasing our market share in the quarters ahead. Looking at our segment mix for the quarter, revenue contribution stood at 64% from passenger vehicles, 31% from 2 and 3-wheelers and 5% from commercial vehicles and others. This well-diversified mix underscores our solid positioning across multiple segments of the automotive lighting. From a product standpoint, front lighting contributed 68% of total revenue, followed by rear lighting at 23% with other products making up the remaining 9%. From a customer perspective, revenues from Maruti and Tata Motors witnessed strong growth of 43% and 68% Y-o-Y, respectively, driven by multiple new models SOPs. Our engagement continues to deepen and we remain in active discussions for upcoming vehicle platform as well. At the same time, we also witnessed healthy business growth from TVS Motors, reflecting focus on customer diversification. Coming to CapEx, as mentioned earlier, our ongoing CapEx plans are progressing well and remain aligned with future growth requirements and customer commitments. For FY '27, our CapEx guidance updated to INR 200 crores to INR 250 crores, mainly due to new order wins. Our net debt -- net long-term debt as on 30 June, 2026, stands at INR 209 crores. With that, we now open the floor for questions. Thank you once again.

[Operator Instructions] We have our first question from the line of Anubhav Mukherjee from Prescient Capital.

Congrats on a great set of numbers. Sir, my first question is that in the revenue mix by customers, the others segment has grown significantly, almost doubled year-on-year. Can you please share which are the OEMs in this others segment?

Sorry, your voice was not clear. Can you repeat, please?

Ravi, the other customers which are classified under the others category, that year-on-year has grown by 133%, which are the customers -- key customers which incorporate into the others category.

Yes, sir, if you can share that, that would be very helpful.

So mainly this is consisting of our Skoda, Volkswagen business, which we started from our Chakan 3 facility. So that is the key customer here. Of course, there are many multiple other customers.

Okay, sir. And sir, in the 2-wheeler segment...

Sorry to interrupt you, Anubhav. Can you please use your handset? Your voice is quite muffled.

Actually, I'm using my handset. Hello? Is it better?

Yes. Please go ahead with the questions.

Sir, apart from like HMSI and Hero, sir, which are our key like 2-wheeler customers? I'm asking this because the overall growth in 2-wheeler seems to be higher than the growth combined from these 2 OEMs.

So the company is catering to almost all the 2-wheeler manufacturers. Apart from HMSI and Hero, which are significant customers, the company also continues to cater to Suzuki 2-wheelers, Yamaha Motors as well as TVS as the entire landscape of 2-wheelers, but a significant growth is expected to come from HMSI going forward, which is also reflected in our order book.

[Operator Instructions] We have our next question from the line of Sanjay Shah from KSA Securities.

Sir, congratulating on the numbers and the growth what we have shown in this Q1. My question was regarding our last call when you highlighted upon some strategic shift that is trying to prepone recoveries via monthly amendment. Can you highlight upon, because still even our penetration on LED is moving higher, our tech-led approach, localization approach, economies of scale, still our margins -- we are not that satisfied because we are still below 10%, which we highlighted to grow from here on. So what is the strategy, sir, about that?

So let me come in here. I think number one, when it comes to realizations, we had talked that we are hoping that some of the OEMs, because there was a massive volatility on specifically the electronics buying and the commodity prices went through the roof, we were hoping that monthly amendments is something which the OEMs agree upon. However, that has not happened for most of the industry. I believe only commodities like aluminium was something they were willing to give, which does not affect this company. So as of now, we are still looking at quarterly or 6 monthly amendments. And as a result of that, as Ravi mentioned, when it comes to the margin, there is almost a 150 bps margin reduction in quarter 1, primarily due to these recoveries not having realized in quarter 1. So we have obviously passed on the price increase to our suppliers, but we are hoping this realization comes in, in quarter 2. And if you look at that, then the margins would be close to about 10.5% to 11% at a total EBITDA level, which is in line with our guidance for FY '27 in the full year.

That's helpful. Sir, my next question was regarding our future green shoots. Deepak, sir, since a veteran of this industry and you know this industry much better, so which are the green shoots we see for our company penetrating over and above LED? Is there a vertical shift, even commercial vehicle penetration or anything else which we need to understand?

Thank you very much for this question. I think see, as a -- right now, we have a very diversified customer mix. We are well penetrated in the pass cars. And fortunately, the 2-wheeler industry, if you see, has started to really recover and really boost, especially over the last 12 months and continues to do so. Also, we do feel that lighting will continue to be a very value-added product where the value creation, particularly when trends are coming towards EV conversion, there will be more basically value content because of not just LEDs, but more features which are coming in. Well, it probably would be too premature to preempt. But if I look at global lighting trends, LED has become basically now a hygiene. Going forward, there are multiple other technologies on the lighting front, both interiors as well as exteriors, which are into laser, which are into more basically dynamic lighting, which are also more towards comfort lighting. And the vehicle lighting contribution is going up and up. So we are actually in a much more sweet spot. We are seeing that as premiumization is taking place, we will do that. We continue to focus on right now certain underpenetrated customers for us, like, for example, TVS, we do feel that in future will be a big growth driver for the company. We also probably look at SMIPL, which is the Suzuki Motors 2-wheelers. We think that also will become growth drivers for the company in the 2-wheeler segment. Pass car, I think we are well entrenched. And of course, there is traction now in the commercial vehicle as well as the tractor segment. So we are feeling that going forward -- and you see the order book of the company, I think Ravi mentioned that our order book stood at about INR 2,500 crores. I think that's a very healthy sign for the growth of the company, irrespective of how the industry will grow.

[Operator Instructions] We have our next question from the line of Jyoti Singh from Haitong Investments.

A few questions from my side, sir. Like from earlier participant, you mentioned like CV good traction and tractor good traction. And along with TVS and Suzuki, you are seeing -- going forward we'll see more growth from there. So just wanted to clarify on this thing, why we are not getting order till now from these customers? And also, CV side, we are not seeing industries doing really well competitively earlier the way it used to. So wanted your view on those side? And another, apart from this, how much our product is powertrain agnostic? Because currently, only 12% of the order book is from EV. So given broader industry EV push and Lumax is underweight on EV OEM wins, so what's the strategy to grow EV content per vehicle going forward?

Okay. Thanks, Jyoti. I'll just take this question. So first and foremost, the lighting is powertrain agnostic, right? So irrespective, you make EV, ICE, CNG, I mean the lighting goes in. But in the EV space, as vehicles continue to become more and more electric, be it pass cars or 2-wheelers, they would need more energy efficiencies and lightweighting. And hence, the value creation on the lighting product on the vehicle has a much more bigger opportunity. And you can see that on the BEVs, you can see that on also our EV portfolio. Second point you mentioned on the SMIPL, TVS, I think these were already customers. However, now we are seeing a much more higher penetration with their growth, and we are continuously engaged with them for it. So we will continue to do this in terms of all OEM manufacturers within India. And we continue to basically seek new opportunities. Particularly on CV, you mentioned, why it has not been as heavily growth. Please also do understand that on the CV state, there is a very, very standardized product. And still, the tech on the lighting front, it is not equivalent to basically the pass car phase. So we are basically discussing with various OEMs on their new platforms on CVs. And when the technology comes in, we would basically try to create certain values in orders with them.

Just to add and supplement to that, Jyoti, I think if you look at our total pie from CV, it has remained unchanged at about 5% of the total revenue pie on a year-on-year quarter 1, which also means that CV business for us has also grown by 30% to 35% on an annualized basis, which is much more than what the CV industry has grown.

Understood, sir. But currently, as per my channel check, what I'm seeing that CV is not doing very well compared to the 2-wheeler and 4-wheeler, we are getting the traction. But yes, understood well. And another, sir, on the revenue mix side, like major revenue, 56% of revenue, we are getting MSIL, M&M and HMSI side. So what's being done to diversify further? And are there any specific new OEM that we are in active discussion or targeting? And Hero, again, share slightly declined year-on-year basis, while MG and Toyota has done really well for us. So any read on the underlying customer value dynamic or 2-wheeler softness versus PV strength in your portfolio?

I think for me, what is important is our wallet share across the customers. The quarter-on-quarter changes with respect to the revenue are just an outcome of the product mix. It is not that the wallet share has increased. On the contrary, specifically for 3 or 4 customers, Maruti Suzuki, our wallet share is likely to go up significantly, which is reflected into the order book. From less than 30% today, we are looking at probably a 35% to 40%. And also on the HMSI, specifically on the tail lamps, the wallet share is likely to exponentially increase by almost 2 to 3x in FY '28. As a part of the order book, as you mentioned, 60% of our order book will be in SOP in FY '28. So again, I don't see any significant shifts across OEMs in terms of business share. But again, specifically, you talked about MG or specifically you talked about certain other OEMs, it is largely an outcome of a product mix.

Understood, sir. And sir, also, if you want to comment on M&M because another company of ours that is doing really well driven by largely M&M. So what kind of traction we are seeing from M&M side?

I think M&M, we continue to have a very strong wallet share for the lighting. I was not clear what was the comparison you were trying to draw with other company, but Mahindra & Mahindra continues to be a key customer for the group. And specifically for this company, we continue to maintain almost close to a 40% to 50% wallet share of Mahindra's overall lighting requirements.

I'll just try to add one thing. Jyoti, if you're looking at a strategy point of view, please understand that all the segments of the automotive sector in India is largely concentrated by 4 to 5 key players. And fortunately, Lumax has a top wallet share with mostly the 4 to 5 in almost all the segments. And hence, we would like to focus on that when the growth momentum is coming in very strongly. And of course, wherever there are opportunities to figure out if there are any new order wins from a new customer or we are underpenetrated, we are continuing to do that. So case in point, Mahindra, Maruti will continue to remain our focus in this spring, along with, of course, Tata. And as you know, associate company SL Lumax already caters to Hyundai Kia. That covers 92% of the pass car market in India currently. And same way, if you look at HMSI, we you look at -- we look at Hero, we look at also TVS is catering from this company, Bajaj, of course, from the other group companies. So we actually again cater almost about 85% from catering to this vehicle maker. So we are in a very strong position. Of course, commercial vehicle, as I said, has different lead cycles, have different type of technology. So we will see wherever the opportunity comes in on those off-roaders, 3-wheelers and commercial vehicles.

Great, sir. Understood. Just one last question, sir, on the CapEx side. So like in '26, it was INR 410 crores. So what's the -- for '27 CapEx guidance?

Yes. Ravi this side. So as I mentioned, basically this year, we are expecting CapEx of somewhere around INR 200 crores to INR 250 crores. And in the previous call we mentioned INR 100 crores to INR 150 crores. So the reason of increase is we have won good business over the last 4 months. So therefore, we are expanding it. So it would be close to INR 200 crores to INR 250 crores.

And sir, any bifurcation of it?

Bifurcation is the maintenance CapEx, as we mentioned, would continue to be some INR 40 crores to INR 50 crores. The rest would go to the new business wins or capacity expansion for new business, yes.

We have our next question from the line of Saurabh Jain from Sunidhi Securities.

Congratulations to the team. We have outperformed the expectations yet another time. Sir, my first question, I would like to -- it was touched by the previous participant. So we have showcased strong growth across Maruti, HMSI and all while M&M for the last couple of quarters has been kind of flattish. Of course, we have done pretty well over the last 2 years, but having a wallet share of 40% to 50% and yet the revenue for last almost 3 quarters is around 200 or less, 4 quarters. So if you can just explain a bit we have good wallet share over there, but yet for the last few quarters, that number is not growing.

I think it's just an outcome of the product mix. Certain platforms, for example, the new X -- I'm not sure what the model name is, but the XUV700 EV is a platform which we are not on, but that has significantly pulled the volumes and the growth of Mahindra in quarter 1. So again, it's an outcome of product mix. Unfortunately, for this quarter, perhaps the other 50% of the models did a lot better than the 40%, 50% where we are present on. So again, strategically, there is no shift. Strategically, we are still a key supplier partner to Mahindra for the lighting needs, but it's just a 1 quarter. If you look at it from a full year perspective, we should be in line with Mahindra's overall growth.

Okay. And sir, my second question is on mold revenue. On the previous call, you had mentioned that we can see steep rise in FY '27 revenue from mold business. So should we expect this current run rate of this quarter to continue for the rest or maybe it can go much higher? And this is important because that will help us to steer the course of margin trajectory as well.

Yes. So Ravi this side. So this year, as you mentioned, yes, we are expecting healthy growth of mold sale compared to last financial year on a full year basis. But as we already shared in previous calls, it all depends -- the SOP time lines from our respective customer. But we are hopeful that we will register good growth compared to last financial year.

But as part of our visibility, I think majority of these mold revenues will be planned for H2, specifically in Q3 or Q4.

Any ballpark number would you be able to give?

So on a full year basis, like last year...

Yes, full year.

Full year, our last year mold sale was somewhere around INR 180 crores, INR 185 crores. And this year, we are hopefully targeting INR 250 crores to INR 300 crores.

Okay. And sir, last question about the FY '28 CapEx.

Sorry? FY...

FY '28 CapEx.

FY '28 CapEx will depend how the business wins will happen, but our guidance would be in line with what we mentioned earlier, somewhere INR 150 crores to INR 200 crores at this moment.

I think it's too premature to give FY '28 CapEx guidance. But for the current year, we are revising it to upwards to INR 200 crores to INR 250 crores, largely because of a strong order book. And as I mentioned, 60% of the order book or roughly almost INR 1,500 crores will get into SOP in FY '28.

We have our next question from the line of Aditya Kondawar from Complete Circle Capital.

Congrats on a great call. My first question was if we have any guidance for the next 2, 3, 4 years, what kind of revenue growth rate or a PAT growth rate we are looking at? And my second question was, I was just looking at this new car, 2027 Audi Q9, and basically the lights have built-in projector. So for example, if you give a right indicator, you would see the exterior ground projectors or exterior ground figures coming up. So this is what you had hinted towards the future of lighting, and just wanted more color on that. What are the various technologies that are working around the world and some of the technologies that we are working on?