Lumax Industries Limited

Absolute : LONG
Relative : Overweight
3QFY18 Result: Estimate (),PT (), Rating () Regular Coverage 42% ATR in 13 Months
Market share gains in 2W OEMs visible, LED lights to drive value growth, maintain LONG Auto
© 2017EquirusAll rights reserved
Lumax Industries’ (LUMX) 3QFY18 numbers were ahead of EE as they included Rs 65mn Estimate Revision:
Rating Information
pricing increase from customers related to 9MFY18, adjusted for which EBITDA came in Change from previous
Price (Rs) 1,750 Current
line; however, consolidated PAT fell short of expectations on lower profit in associate (%)
Target Price (Rs) 2,464
company, SL Lumax – a one-off in our view. We had highlighted in our Jan’18 initiation Rs Mn FY18E FY19E FY18E FY19E
Target Date 31st MAR'19
note that LUMX will gain share in Hero Motocorp’s (HMCL) supplies; this is visible in Sales 14,703 16,764 4.4% 4.2%
Target Set On 3rd JAN’18
LUMX recently securing supply contracts for three new HMCL models. With the new EBITDA 1,197 1,485 5.2% 3.1%
Implied yrs of growth (DCF) 20
Swift launch in the current month, where LUMX is a key lighting supplier, we think PAT
Fair Value (DCF) 2,186 720 885 1.5% -0.9%
LUMX’s growth momentum should sustain. We however cut profit contribution from SL
Fair Value (DDM) 666 EPS 77.1 94.8 1.5% -0.9%
Lumax, leading to a 1% downward revision in our FY19E EPS. We maintain LONG on the
Ind Benchmark BSEAUTO
stock as LUMX is good play on the LED shift in automotive lighting, with a Mar’19 TP of Consolidated Financials
Model Portfolio Position NA
Rs 2,464 (vs. Rs 2,486 earlier).
Rs. Mn YE Mar FY17A FY18E FY19E FY20E
Stock Information Sales 12,998 14,703 16,764 19,302
New model wins from HMCL validate our thesis: HMCL launched refreshes of its
Market Cap (Rs Mn) 16,359 EBITDA 998 1,197 1,485 1,820
models Passion Pro, Passion X Pro and Super Splendor towards December-end. LUMX is
Free Float (%) 26.47 % Depreciation 404 477 549 594
a key supplier for all three models; since these are newly-added models, they should
52 Wk H/L (Rs) 2250/1065.65 Interest Expense 114 62 89 51
lead to incremental revenue flow for LUMX. We had highlighted in our initiation note
Avg Daily Volume (1yr) 14,092
that HMCL’s key supplier, Unitech Machines, is not able to catch up with changes in Other Income 57 58 59 68
Avg Daily Value (Rs Mn) 22
automotive lighting and therefore its share will go to players like LUMX and Rinder Reported PAT 552 711 885 1,149
Equity Cap (Rs Mn) 93
India (part of Minda Industries). Recurring PAT 552 720 885 1,149
Face Value (Rs) 10
Total Equity 3,159 3,585 4,256 5,136
Bloomberg Code LUMX IN Strong 23% yoy sales growth driven by volume, pricing growth: During the quarter,
Gross Debt 924 1,194 794 494
Ownership Recent 3M 12M LUMX’s growth was aided by a higher share in HMCL and HMSI, through GRAZIA in case
Cash 14 190 225 580
Promoters 73.5 % 0.0 % 0.0 %
of the latter. The company also benefited from New Dzire, where volumes are
Rs Per Share FY17A FY18E FY19E FY20E
DII 0.3 % -1.4 % 0.1 %
substantially better than last year. LUMX’s share in other OEMs (reported separately in
Earnings 59.1 77.1 94.8 123.0
FII 0.6 % 0.0 % -1.6 %
presentation) is also growing well. Management indicated that LED lamps contributed
Book Value 338 384 456 550
Public 25.6 % 1.4 % 1.5 %
25% of sales during 3Q vs. 8% in full-year FY17, driving strong value growth as well.
Dividends 14.5 16.5 19.5 24.7
Price % 1M 3M 12M Adjusted EBITDA in line due to sales beat, EBITDA margin down 65bps yoy: Despite FCFF 50.8 42.9 55.6 80.0
Absolute -18.0 % 0.0 % 55.1 % strong sales growth, other expenses increased 27% yoy (as a percentage of sales by P/E (x) 29.6 22.7 18.5 14.2
Vs Industry -13.6 % -0.5 % 40.4 % 67bps). Adjusted EBITDA margin at 7.8% declined 65bps yoy/15bps qoq, coming 69bps P/B (x) 5.2 4.6 3.8 3.2
FIEMIND -15.5 % -6.0 % -18.0 % below EE. Management indicated that while manufacturing EBITDA margins improved EV/EBITDA (x) 17.9 14.7 11.6 9.1
MINDAIND -9.5 % 26.4 % 200.0 % yoy, lower mould sales led to EBITDA margin contraction. We believe that with ROE (%) 19 % 21 % 23 % 24 %
Standalone Quarterly EPS forecast increasing contribution of LED lamps, margins should improve going ahead. Core ROIC (%) 13 % 13 % 16 % 19 %
Rs/Share 1Q 2Q 3Q 4Q Management expects to achieve double-digit margins through better absorption of EBITDA Margin (%) 8% 8% 9% 9%
EPS (16A) 10.5 13.0 14.1 11.7 fixed expenses. The Sanand facility (inaugurated in Jan’18) ramp-up is expected to be
Net Margin (%) 4% 5% 5% 6%
EPS (17E) 10.0 19.5 18.6 14.6 fast as supplies for MSIL Swift will happen from there.

February 5, 2018Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112 +91 79-40504017) Page 1 of 12 Before reading this
report, you must refer to the disclaimer on the last page.
 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Exhibit 1: Segment-wise revenue split for 9MFY18 Exhibit 3: Customer-wise revenue split for 9MFY18

CV, 5%
Others, 21%
MSIL, 31%
2W, 26%
Tata , 7%

Hero, 11%
M&M, 10%

PV, 69% HMSI, 11% HCIL, 9%

Source: Company, Equirus Securities Source: Company, Equirus Securities

Exhibit 2: Quarterly sales, EBITDA and EBITDA margins Exhibit 4: Product-wise revenue split for 9MFY18

Sales EBITDA EBITDA Margin - RHS

4,500 10%
9% 3,851 3,708 Others, 11%
4,000 8% 3,796 9% 9%
8% 8% Rear Lighting,
3,500 3,404 8% 20%
8%
3,031 3,076 3,194 3,042
3,028 3,028 2,955 7% 7%
3,000
7% 7% 7% 7%
6%
2,500
5%
2,000
4%
1,500
3%
1,000 2%
500 233 233 256 255 257 247 302 329 Front Lighting,
199 205 215 1%
69%
0 0%
1QFY16 2QFY16 3QFY16 4QFY16 1QFY17 2QFY17 3QFY17 4QFY17 1QFy18 2QFY18 3QFY18

Source: Company, Equirus Securities Source: Company, Equirus Securities

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 2 of 11

 Lumax Industries Ltd. Absolute – LONG
Earnings call takeaways
Industry outlook and updates
 Robust demand for 2Ws was driven by rural demand, while CV growth was largely
steered by strong growth in the MHCV segment.
 Auto industry has posted healthy growth in 3QFY18 and the industry grew by 11.3%
yoy in 9MFY18 with ~2.14 crore vehicles.
 Lighting products have been transformed from a functional to a styling product for
all vehicles and automobiles.
 With an increased focus on safety norms, all 2Ws are sold now with the AHO feature;
at the same time, focus on lower energy consumption and improved aesthetics is
driving demand for LED lamps from OEMs.
 Currently, LED lighting system forms about 25% of revenues; LED contribution
improved from ~8% in FY16 to 20% in FY17. The company expects an exponential
growth in its demand in the coming years.
 LUMX expects the mix of LED: conventional to reach 50:50 in the next 2-3 years.
 The company will localize electronic components once LED volumes ramp up in order
to reduce the import content.
 Market share in 2W lighting is about 25%.
 LUMX is focusing on localizing the input content (electronic content); currently,
about 40% of the input content is imported.
Key clients acquisition and new plant setup
 LUMX’s major clients include Maruti Suzuki, Mahindra & Mahindra, Honda Cars, Tata
Motors, HMSI and HMCL.
 The company has commenced production from its Sanand plant from 10 Jan’18. In
FY18, LUMX expects about Rs 250mn of revenue from the plant.
 The Sanand facility has been set up with an annual capacity of ~300,000 car-sets.
The plant has started supply of LED headlamps and rear lamps for the new
generation Maruti Suzuki Swift Platform.
 Going forward, the Sanand facility shall cater to the requirements of Maruti Suzuki
and Tata Motors in the passenger car segment, along with Honda Motor Cycle and
Hero Motocorp in the 2W segment.
February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017)
Relative – Overweight 42% ATR in 13 Months
 LUMX has launched new lamps for HMCL’s Passion-Pro, xPro and Super Splendor
models during the quarter.
 The company has added a new customer, Morris Garages (MG) Motor India, and
received orders for supply of head lamps and tail lamps for its SUV, the SOP of which
is expected in Apr’19.
 LUMX revealed its new logo and the newly-launched visual brand identity on 8
Nov’17. The company expects this would enable its aftermarket division to further
strengthen its market position
Financial performance, raw material costs
 Consolidated revenue (net) grew 23% YoY to Rs 3.7bn as against Rs 3bn in 3QFY17.
 Mould sales were 72% lower than 3QFY17.
 EBITDA grew 30% yoy to Rs 330mn as against Rs 250mn last year; margins stood at
8.9%.
 EBITDA margin on manufacturing sales were at 8.2% as against 7.8% last year.
 Consolidated PAT grew 6% yoy to Rs 170mn. PAT growth was subdued vis-à-vis EBITDA
and sales growth owing to decline in profits from associate companies.
 Revenue from associate companies came in lower owing to price reduction of
Rs 300mn from customers this quarter.
 Volumes grew by 15% yoy in 3QFY18.
 Price increase of Rs 650mn, pending from previous quarters, was booked in 3QFY18.
 Capex for FY18 is Rs 1.3bn, including for the Sanand plant.
Page 3 of 11
 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Quarterly performance, consolidated

% Change
Rs mn 3QFY18 3QFY18E 2QFY18 3QFY17 Comments
3QFY18E 2QFY18 3QFY17
Net Sales 3,708 3,381 3,796 2,955 10% -2% 25%

Raw Materials Consumed 2,339 2,224 2,458 1,859 5% -5% 26%

Employee Costs 475 412 452 402 15% 5% 18%
Other Expenses 565 456 584 439 24% -3% 29%
Total Expenditures 3,379 3,093 3,494 2,700 9% -3% 25%
EBITDA 329 287 302 255 15% 9% 29%
Adj. EBITDA 286 287 302 255 0% -5% 12%
Depreciation 118 123 116 106 -4% 1% 11%
EBIT 212 165 186 148 29% 14% 43%
Interest 11 19 12 25 -41% -2% -56%
Other Income 19 10 8 16 80% 141% 15%

PBT 219 156 182 139 41% 20% 57%

Tax 47 34 42 14 37% 13% 234%

PAT before MI & Associates 172 122 140 125 41% 23% 37%
Minority Interest 0 0 0 0
Profit from Assoc. 8 54 67 40 -85% -88% -80%
Recurring PAT 180 176 208 165 3% -13% 9%
Extraordinaries 3 0 3 0 NA 14% NA
Reported PAT 177 176 205 165 1% -14% 7%
EPS (Rs) 19.3 18.8 22.2 17.7 3% -13% 9%

EBITDA Margin 8.9% 8.5% 8.0% 8.6% 39 93 26

Adj EBITDA Margin 7.8% 8.5% 8.0% 8.6% -69 -15 -82
EBIT Margin 5.7% 4.9% 4.9% 5.0% 84 82 68
PBT Margin 5.9% 4.6% 4.8% 4.7% 130 112 120
PAT Margin 4.8% 5.2% 5.4% 5.6% -43 -62 -83
Tax Rate 21.5% 22.0% 22.9% 10.1% -49 -143 1,138
Key Cost Items as % of Sales
Raw Material 63.8% 65.8% 64.7% 62.9% -198 -93 92
Employee Cost 13.0% 12.2% 11.9% 13.6% 76 104 -66
Other Expenses 15.4% 13.5% 15.4% 14.9% 192 3 56

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 4 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Company Snapshot Key triggers

 Waiting period on new model launches
How we differ from Consensus
 Monthly production volumes
- Equirus Consensus % Diff Comment
Sensitivity to Key Variables % Change % Impact on EPS
FY18E 77.1 79.4 -3 % below consensus due to lower margin
EPS assumptions EBITDA Margin 1% 21 %
FY19E 94.8 101.6 -7 %
- - -
FY18E 14,703 14,358 2%
Sales - - -
FY19E 16,764 16,663 1%
FY18E 711 740 -4 % DCF Valuations & Assumptions
PAT
FY19E 885 947 -6 % Rf Beta Ke Term. Growth Debt/IC in Term. Yr
6.7 % 1.0 12.7 % 3.0 % 20.0 %
Key Investment arguments:
 Largest player in automotive lighting, to be a key beneficiary of shift to LEDs - FY18E FY19E FY20-22E FY23-27E FY28-32E
 Focus on increasing market share in CVs. Tractors and 2Ws Sales Growth 13 % 14 % 10 % 11 % 9%
 Return matrix to improve led by growth and margin expansion NOPAT Margin 4% 4% 5% 5% 5%
 Large exposure to MSIL provides good growth visibility IC Turnover 3.46 3.71 4.10 4.22 4.22
RoIC 13.1 % 16.2 % 22.0 % 23.9 % 23.6 %
Key Assumptions:
Years of strong growth 1 2 5 10 15
Rsmn FY17 FY18E FY19E FY20E FY21E Valuation as on date (Rs) 862 936 1,335 1,597 1,819
MSIL 4,549 4,633 5,403 6,359 7,414 Valuation as of 30thSep'18 989 1,074 1,531 1,832 2,086

M&M 1,430 1,387 1,528 1,717 1,930 Based on DCF, assuming 20 years of 13% CAGR growth and 20% average ROIC, we derive
HCIL 1,170 1,325 1,475 1,657 1,862 31st Mar’19 fair value of Rs 2,186.
HMSI 1,170 1,590 1,889 2,203 2,569
HMCL
Company Description:
1,170 1,651 1,889 2,183 2,522
Lumax Industries is the market leader in the Indian automotive lighting industry with the
Others 3,509 4,117 4,579 5,182 5,866
consolidated market share (including SL Lumax) of ~35%. It is one of the preferred
Total Sales 12,998 14,703 16,764 19,302 22,163 suppliers to automotive OEMs across segments. Lumax has technology tie up with Stanley
Electric (Japan) and SL Corporation (Korea) in its associate company SL Lumax in the
automotive Lighting space.

Comparable valuation EPS P/E BPS P/B RoE Div Yield

Mkt Cap Price Target
Company Reco. CMP Rs. Mn. Target Date FY17A FY18E FY19E FY17A FY18E FY19E FY17A FY18E FY17A FY18E FY19E FY17A FY18E
Lumax Industries LONG 1,750 16,359 2,464 31st MAR'19 59.1 77.1 94.8 29.6 22.7 18.5 337.9 4.6 19 % 21 % 23 % 0.8 % 0.9 %
FIEM Inudstries LONG 871 11,461 1,336 31st MAR'19 36.0 36.4 51.4 28.4 28.1 19.9 321.9 3.1 14 % 11 % 15 % 0.8 % 0.8 %
Minda Industries ADD 1,150 99,416 1,116 30th DEC'18 19.4 26.9 34.9 53.1 38.4 29.6 118.9 7.3 22 % 21 % 23 % 0.2 % 0.2 %

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 5 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Standalone Quarterly Earnings Forecast and Key Drivers

Rs in Mn 1Q17A 2Q17A 3Q17A 4Q17A 1Q18A 2Q18A 3Q18E 4Q18E 1Q19E 2Q19E 3Q19E 4Q19E FY17A FY18E FY19E FY20E
Revenue 3,028 3,042 2,955 3,851 3,404 3,796 3,708 3,795 3,881 4,328 4,228 4,326 12,998 14,703 16,764 19,302

EBITDA 233 256 255 257 247 302 329 319 326 390 380 389 998 1,197 1,485 1,820
Depreciation 102 104 106 101 112 116 118 131 133 136 139 142 404 477 549 594
EBIT 131 152 148 156 135 186 212 188 193 254 242 248 594 720 937 1,227
Interest 30 29 25 22 13 12 11 27 27 22 22 18 114 62 89 51
Other Income 13 16 16 22 18 46 19 14 14 12 17 15 62 96 59 68
PBT 114 139 139 155 140 220 219 175 181 244 236 245 542 754 906 1,244
Tax 16 18 7 45 47 38 46 38 43 59 57 59 90 169 217 311
Recurring PAT 98 121 132 110 93 182 173 136 137 185 180 186 452 585 689 933
Extraordinary 3 3 3 3 3 3 3 0 0 0 0 0 0 9 0 0
Reported PAT 95 119 129 107 90 179 170 136 137 185 180 186 452 576 689 933
EPS (Rs) 10.51 12.99 14.12 11.74 9.96 19.47 18.56 14.58 14.70 19.84 19.22 19.91 48.33 62.62 73.73 99.89
Key Drivers
- - - - - - - - - - - - - - - - -
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- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - -
Sequential Growth (%)
Revenue -6 % 0% -3 % 30 % -12 % 12 % -2 % 2% 2% 12 % -2 % 2% - - - -

EBITDA 9% 10 % 0% 1% -4 % 22 % 9% -3 % 2% 19 % -2 % 2% - - - -
EBIT 11 % 15 % -2 % 5% -13 % 38 % 14 % -11 % 3% 31 % -5 % 2% - - - -
Recurring PAT -5 % 24 % 9% -17 % -15 % 95 % -5 % -21 % 1% 35 % -3 % 4% - - - -
EPS -5 % 24 % 9% -17 % -15 % 95 % -5 % -21 % 1% 35 % -3 % 4% - - - -
Yearly Growth (%)
Revenue 0% 0% -5 % 19 % 12 % 25 % 25 % -1 % 14 % 14 % 14 % 14 % 4% 13 % 14 % 15 %
EBITDA 0% 28 % 24 % 20 % 6% 18 % 29 % 24 % 32 % 29 % 15 % 22 % 13 % 20 % 24 % 23 %
EBIT 0% 45 % 35 % 32 % 3% 22 % 43 % 20 % 43 % 37 % 14 % 32 % 17 % 21 % 30 % 31 %
Recurring PAT 0% 63 % 61 % 6% -5 % 50 % 31 % 24 % 48 % 2% 4% 37 % 21 % 29 % 18 % 35 %
EPS 0% 63 % 61 % 6% -5 % 50 % 31 % 24 % 48 % 2% 4% 37 % 21 % 30 % 18 % 35 %
Margin (%)
EBITDA 8% 8% 9% 7% 7% 8% 9% 8% 8% 9% 9% 9% 8% 8% 9% 9%
EBIT 4% 5% 5% 4% 4% 5% 6% 5% 5% 6% 6% 6% 5% 5% 6% 6%
PBT 4% 5% 5% 4% 4% 6% 6% 5% 5% 6% 6% 6% 4% 5% 5% 6%
PAT 3% 4% 4% 3% 3% 5% 5% 4% 4% 4% 4% 4% 3% 4% 4% 5%

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 6 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Consolidated Financials
P&L (Rs Mn) FY17A FY18E FY19E FY20E Balance Sheet (Rs Mn) FY17A FY18E FY19E FY20E Cash Flow (Rs Mn) FY17A FY18E FY19E FY20E
Revenue 12,998 14,703 16,764 19,302 Equity Capital 93 93 93 93 PBT 537 716 906 1,244
Op. Expenditure 12,000 13,506 15,278 17,481 Reserve 3,065 3,491 4,163 5,042 Depreciation 404 477 549 594
EBITDA 998 1,197 1,485 1,820 Networth 3,159 3,585 4,256 5,136 Others -136 -9 0 0
Depreciation 404 477 549 594 Long Term Debt 924 1,194 794 494 Taxes Paid -118 185 217 311
EBIT 594 720 937 1,227 Def Tax Liability 611 259 259 259 Change in WC 78 147 161 198
Interest Expense 114 62 89 51 Minority Interest 0 0 0 0 Operating C/F 1,001 1,146 1,398 1,725
Other Income 57 58 59 68 Account Payables 3,443 4,072 4,643 5,346 Capex -627 -791 -946 -1,016
PBT 537 716 906 1,244 Other Curr Liabi 1,018 1,297 1,479 1,703 Change in Invest -1 0 0 0
Tax 90 185 217 311 Total Liabilities & Equity 9,154 10,407 11,431 12,937 Others 7 0 0 0
PAT bef. MI & Assoc. 447 531 689 933 Net Fixed Assets 3,874 4,497 4,698 4,904 Investing C/F -621 -791 -946 -1,016
Minority Interest 0 0 0 0 Capital WIP 525 400 400 400 Change in Debt -286 270 -400 -300
Profit from Assoc. 105 189 196 216 Others 1,284 1,100 1,296 1,513 Change in Equity 0 -105 0 0
Recurring PAT 552 720 885 1,149 Inventory 1,160 1,628 1,856 2,137 Others -116 -343 -17 -54
Extraordinaires 0 9 0 0 Account Receivables 1,909 2,302 2,625 3,022 Financing C/F -402 -178 -417 -354
Reported PAT 552 711 885 1,149 Other Current Assets 389 290 331 381 Net change in cash -22 177 35 355
FDEPS (Rs) 59.1 77.1 94.8 123.0 Cash 14 190 225 580 RoE (%) 19 % 21 % 23 % 24 %
DPS (Rs) 14.5 16.5 19.5 24.7 Total Assets 9,154 10,407 11,431 12,937 RoIC (%) 14 % 16 % 18 % 21 %
CEPS (Rs) 102.3 128.1 153.5 186.6 Non-cash Working Capital -1,002 -1,149 -1,310 -1,508 Core RoIC (%) 13 % 13 % 16 % 19 %
FCFPS (Rs) 50.8 42.9 55.6 80.0 Cash Conv Cycle -28.1 -28.5 -28.5 -28.5 Div Payout (%) 30 % 25 % 24 % 23 %
BVPS (Rs) 337.9 383.8 455.7 549.8 WC Turnover -13.0 -12.8 -12.8 -12.8 P/E 29.6 22.7 18.5 14.2
EBITDAM (%) 8% 8% 9% 9% FA Turnover 3.0 3.0 3.3 3.6 P/B 5.2 4.6 3.8 3.2
PATM (%) 4% 5% 5% 6% Net D/E 0.3 0.3 0.1 0.0 P/FCFF 34.4 40.8 31.4 21.9
Tax Rate (%) 17 % 26 % 24 % 25 % Revenue/Capital Employed 3.4 3.5 3.7 4.0 EV/EBITDA 17.9 14.7 11.6 9.1
Sales Growth (%) 4% 13 % 14 % 15 % Capital Employed/Equity 2.2 1.9 1.6 1.4 EV/Sales 1.4 1.2 1.0 0.9
FDEPS Growth (%) 6% 31 % 23 % 30 % Dividend Yield (%) 0.8 % 0.9 % 1.1 % 1.4 %
TTM P/E vs. 2 yr forward EPS growth TTM EV/EBITDA vs. 2 yr forward EBITDA growth TTM P/B vs. 2 yr forward RoE
EPS Growth EBITDA Growth 8x
RoE
800000 80% 16x 4000 100% 7x
4000 60% 20x 700000 60% 14x 6x
3000 40% 16x 600000 12x
40% 10x 3000 80%
12x 500000 5x
20% 400000 20% 8x
60%
2000 2000 4x
8x 300000 40%
0% 0%
4x 200000 1000
1000 -20% 100000 -20% 20%
0 -40%
0 -40% 0 0%
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February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 7 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Historical Consolidated Financials

P&L (Rs Mn) FY14A FY15A FY16A FY17A Balance Sheet (Rs Mn) FY14A FY15A FY16A FY17A Cash Flow (Rs Mn) FY14A FY15A FY16A FY17A
Revenue 11,167 11,426 12,552 12,998 Equity Capital 93 93 93 93 PBT 72 144 411 537
Op. Expenditure 10,622 10,832 11,666 12,000 Reserve 1,639 1,710 2,590 3,065 Depreciation 366 362 379 404
EBITDA 545 594 886 998 Networth 1,733 1,803 2,684 3,159 Others 96 98 -30 -136
Depreciation 366 362 379 404 Long Term Debt 1,579 1,595 1,273 924 Taxes Paid -39 -23 -81 -118
EBIT 179 232 507 594 Def Tax Liability 523 495 511 611 Change in WC 37 -36 -28 78
Interest Expense 174 144 134 114 Minority Interest 0 0 0 0 Operating C/F 610 590 813 1,001
Other Income 67 56 39 57 Account Payables 2,862 2,961 3,097 3,443 Capex -290 -455 -381 -627
PBT 72 144 411 537 Other Curr Liabi 595 782 1,021 1,018 Change in Invest 1 133 7 -1
Tax -39 -23 42 90 Total Liabilities & Equity 7,291 7,637 8,586 9,154 Others -61 -30 7 7
PAT bef. MI & Assoc. 111 167 369 447 Net Fixed Assets 3,848 3,958 4,080 3,874 Investing C/F -350 -352 -366 -621
Minority Interest 0 0 0 0 Capital WIP 340 262 170 525 Change in Debt -184 451 -259 -286
Profit from Assoc. 0 0 151 105 Others 331 290 1,013 1,284 Change in Equity 0 0 0 0
Recurring PAT 111 167 520 552 Inventory 772 1,099 1,046 1,160 Others -278 -198 -336 -116
Extraordinaires 0 0 0 0 Account Receivables 1,311 1,442 1,812 1,909 Financing C/F -461 253 -595 -402
Reported PAT 111 167 520 552 Other Current Assets 529 394 430 389 Net change in cash -201 492 -148 -22
EPS (Rs) 11.9 17.8 55.7 59.1 Cash 160 191 35 14 RoE (%) 6% 9% 23 % 19 %
DPS (Rs) 3.5 5.5 12.0 14.5 Total Assets 7,291 7,637 8,586 9,154 RoIC (%) 10 % 9% 15 % 14 %
CEPS (Rs) 51.1 56.5 96.2 102.3 Non-cash Working Capital -845 -808 -830 -1,002 Core RoIC (%) 7% 7% 12 % 13 %
FCFPS (Rs) 56.6 43.4 60.7 50.8 Cash Conv Cycle -27.6 -25.8 -24.1 -28.1 Div Payout (%) 35 % 37 % 26 % 30 %
BVPS (Rs) 185.4 192.9 287.1 337.9 WC Turnover -13.2 -14.1 -15.1 -13.0 P/E 98.2 31.4 29.6 0.0
EBITDAM (%) 5% 5% 7% 8% FA Turnover 2.7 2.7 3.0 3.0 P/B 9.1 6.1 5.2 0.0
PATM (%) 1% 1% 4% 4% Net D/E 0.8 0.8 0.5 0.3 P/FCFF 30.9 40.3 28.8 34.4
Tax Rate (%) -54 % -16 % 10 % 17 % Revenue/Capital Employed 2.9 2.9 2.8 2.8 EV/EBITDA 31.6 21.0 18.5 0.0
Sales growth (%) 4% 2% 10 % 4% Capital Employed/Equity 2.2 2.2 1.7 1.5 EV/Sales 1.5 1.1 1.3 0.0
FDEPS growth (%) -18 % 50 % 212 % 6% Dividend Yield (%) 0.2 % 0.3 % 0.7 % 0.8 %

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 8 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

Equirus Securities
Research Analysts Sector/Industry Email Equity Sales E-mail
Abhishek Shindadkar IT Services abhishek.shindadkar@equirus.com 91-22-43320643 Vishad Turakhia vishad.turakhia@equirus.com 91-22-43320633
Ashutosh Tiwari Auto, Metals & Mining ashutosh@equirus.com 91-79-61909517 SubhamSinha subham.sinha@equirus.com 91-22-43320631
Depesh Kashyap Mid-Caps depesh.kashyap@equirus.com 91-79-61909528 SwetaSheth sweta.sheth@equirus.com 91-22-43320634
Devam Modi Power & Infrastructure devam@equirus.com 91-79-61909516 Viral Desai viral.desai@equirus.com 91-22-43320635
Dhaval Dama FMCG, Mid-Caps dhaval.dama@equirus.com 91-79-61909518 Rushabh Shah rushabh.shah@equirus.com 91-22-43320632
Manoj Gori Consumer Durables manoj.gori@equirus.com 91-79-61909523 Dealing Room E-mail
Maulik Patel Oil and Gas maulik@equirus.com 91-79-61909519 Ashish Shah ashishshah@equirus.com 91-22-43320662
Praful Bohra Pharmaceuticals praful.bohra@equirus.com 91-79-61909532 IleshSavla ilesh.savla@equirus.com 91-22-43320666
Rohan Mandora Banking & Financial Services rohan.mandora@equirus.com 91-79-61909529 Manoj Kejriwal manoj.kejriwal@equirus.com 91-22-43320663
Associates E-mail Dharmesh Mehta dharmesh.mehta@equirus.com 91-22-43320661
Ankit Choudhary ankit.choudhary@equirus.com 91-79-61909533 Sandip Amrutiya sandipamrutiya@equirus.com 91-22-43320660
Bharat Celly bharat.celly@equirus.com 91-79-61909524 Compliance Officer E-mail
Harshit Patel harshit.patel@equirus.com 91-79-61909522 Jay Soni jay.soni@equirus.com 91-79-61909561
Meet Chande meet.chande@equirus.com 91-79-61909513
Nishant Bagrecha nishant.bagrecha@equirus.com 91-79-61909526
Parva Soni parva.soni@equirus.com 91-79-61909521
Pranav Mehta pranav.mehta@equirus.com 91-79-61909514
Ronak Soni Ronak.soni@equirus.com 91-79-61909525
Samkit Shah samkit.shah@equirus.com 91-79-61909520
Shreepal Doshi shreepal.doshi@equirus.com 91-79-61909541
Varun Baxi Varun.baxi@equirus.com 91-79-61909527
Vikas Jain vikas.jain@equirus.com 91-79-61909531
Rating & Coverage Definitions: Registered Office:
Absolute Rating Equirus Securities Private Limited
• LONG : Over the investment horizon, ATR >= Ke for companies with Free Float market cap >Rs 5 billion and ATR >=
20% for rest of the companies Unit No. 1201, 12th Floor, C Wing, Marathon Futurex,
• ADD: ATR >= 5% but less than Ke over investment horizon N M Joshi Marg, Lower Parel,
• REDUCE: ATR >= negative 10% but <5% over investment horizon Mumbai-400013.
• SHORT: ATR < negative 10% over investment horizon Tel. No: +91 – (0)22 – 4332 0600
Relative Rating
• OVERWEIGHT: Likely to outperform the benchmark by at least 5% over investment horizon Fax No: +91- (0)22 – 4332 0601
• BENCHMARK: likely to perform in line with the benchmark
• UNDERWEIGHT: likely to under-perform the benchmark by at least 5% over investment horizon
Investment Horizon
Investment Horizon is set at a minimum 3 months to maximum 18 months with target date falling on last day of a Corporate Office:
calendar quarter. 3rd floor, House No. 9,
Lite vs. Regular Coverage vs. Spot Coverage Magnet Corporate Park, Near Zydus Hospital, B/H Intas Sola Bridge,
We aim to keep our rating and estimates updated at least once a quarter for Regular Coverage stocks. Generally, we
would have access to the company and we would maintain detailed financial model for Regular coverage companies. S.G. Highway Ahmedabad-380054
We intend to publish updates on Lite coverage stocks only an opportunistic basis and subject to our ability to contact Gujarat
the management. Our rating and estimates for Lite coverage stocks may not be current. Spot coverage is meant for Tel. No: +91 (0)79 - 6190 9550
one-off coverage of a specific company and in such cases, earnings forecast and target price are optional. Spot Fax No: +91 (0)79 – 6190 9560
coverage is meant to stimulate discussion rather than provide a research opinion.

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 9 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

© 2017 Equirus Securities Private Limited. All rights reserved. For Private Circulation only. This report or any portion hereof may not
be reprinted, sold or redistributed without the written consent of Equirus Securities Private Limited

Analyst Certification
I, Maulik Patel, author to this report, hereby certify that all of the views expressed in this report accurately reflect my personal views about the subject company or companies and its or their securities. I also
certify that no part of my compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Disclosures
Equirus Securities Private Limited (ESPL) having Corporate Identification Number U65993MH2007PTC176044 is registered in India with Securities and Exchange Board of India (SEBI) as a trading member on the
Capital Market (Reg. No. INB231301731), Futures & Options Segment (Reg. No.INF231301731) of the National Stock Exchange of India Ltd. (NSE) and on Cash Segment (Reg. No.INB011301737) of Bombay Stock
Exchange Limited (BSE).ESPL is also registered with SEBI as Research Analyst under SEBI (Research Analyst) Regulations, 2014 (Reg. No. INH000001154), as a Portfolio Manager under SEBI (Portfolio Managers
Regulations, 1993 (Reg. No.INP000005216) and as a Depository Participant of the Central Depository Services (India) Limited (Reg. No.IN-DP-324-2017). There are no disciplinary actions taken by any regulatory
authority against ESPL. ESPL is a subsidiary of Equirus Capital Pvt. Ltd. (ECPL) which is registered with SEBI as Category I Merchant Banker and provides investment banking services including but not limited to
merchant banking services, private equity, mergers & acquisitions and structured finance.
As ESPL and its associates are engaged in various financial services business, it might have: - (a) received compensation (except in connection with the preparation of this report) from the subject company for
investment banking or merchant banking or brokerage services in the past twelve months;(b) managed or co-managed public offering of securities for the subject company in the past twelve months; or (c) have
received a mandate from the subject company; or (d) might have other financial, business or other interests in entities including the subject company (ies) mentioned in this Report. ESPL & its associates, their
directors and employees may from time to time have positions or options in the company and buy or sell the securities of the company (ies) mentioned herein. ESPL and its associates collectively do not own (in
their proprietary position) 1% or more of the equity securities of the subject company mentioned in the report as the last day of the month preceding the publication of the research report. ESPL or its Analyst or
Associates did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither ESPL nor
Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or
brokerage service transactions. ESPL has not been engaged in market making activity for the subject company.
The Research Analyst engaged in preparation of this Report:-
(a) has not received any compensation from the subject company in the past twelve months; (b) has not managed or co-managed public offering of securities for the subject company in the past twelve months;
(c) has not received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (d) has not received any compensation for products
or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months; (e) has not received any compensation or other benefits from the
subject company or third party in connection with the research report; (f) might have served as an officer, director or employee of the subject company; (g) is not engaged in market making activity for the
subject company.
This document is not directed or intended for distribution to, or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction, where such distribution,
publication, availability or use would be contrary to law, regulation or which would subject ESPL and affiliates to any registration or licensing requirement within such jurisdiction. The securities described herein
may or may not be eligible for sale in all jurisdictions or to a certain category of investors. Persons in whose possession of this document are required to inform themselves of, and to observe, such applicable
restrictions. Please delete this document if you are not authorized to view the same. By reading this document you represent and warrant that you have full authority and all rights necessary to view and read this
document without subjecting ESPL and affiliates to any registration or licensing requirement within such jurisdiction.
This document has been prepared solely for information purpose and does not constitute a solicitation to any person to buy, sell or subscribe any security. ESPL or its affiliates are not soliciting any action based
on this report. The information and opinions contained herein is from publicly available data or based on information obtained in good faith from sources believed to be reliable but ESPL provides no guarantee as
to its accuracy or completeness. The information contained herein is as on date of this report, and is subject to change or modification and any such changes could impact our interpretation of relevant
information contained herein. While we would endeavour to update the information herein on reasonable basis, ESPL and its affiliates, their directors and employees are under no obligation to update or keep the
information current. Also there may be regulatory, compliance, or other reasons that may prevent ESPL and its group companies from doing so. This document is prepared for assistance only and is not intended
to be and must not alone be taken as the basis for an investment decision. Each recipient of this document should make such investigations as it deems necessary to arrive at an independent evaluation of an
investment in the securities of companies referred to in this document including the merits and risks involved. This document is intended for general circulation and does not take into account the specific
investment objectives, financial situation or particular needs of any particular person. ESPL and its group companies, employees, directors and agents accept no liability, and disclaim all responsibility, for the

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 10 of 11

 Lumax Industries Ltd. Absolute – LONG Relative – Overweight 42% ATR in 13 Months

consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. ESPL/its affiliates do and seek to do business with
companies covered in its research report. Thus, investors should be aware that the firm may have conflict of interest.

A graph of daily closing prices of securities is available at http://www.nseindia.com/ChartApp/install/charts/mainpage.jsp and www.bseindia.com (Choose a company from the list on the browser and select the
“three years” period in the price chart).

Disclosure of Interest statement for the subject Company Yes/No If Yes, nature of such interest
Research Analyst’ or Relatives’ financial interest No
Research Analyst’ or Relatives’ actual/beneficial ownership of 1% or more No
Research Analyst’ or Relatives’ material conflict of interest No

Disclaimer for U.S. Persons

ESPL/its affiliates are not a registered broker–dealer under the U.S. Securities Exchange Act of 1934, as amended (the“1934 act”) and under applicable state laws in the United States. In addition Equirus is not a
registered investment adviser under the U.S. Investment Advisers Act of 1940, as amended (the "Advisers Act" and together with the 1934 Act, the “Acts”), and under applicable state laws in the United States.
Accordingly, in the absence of specific exemption under the Acts, any brokerage and investment services provided by Equirus, including the products and services described herein are not available to or intended
for U.S. persons. The information contained in this Report is not intended for any person who is a resident of the United States of America or a resident of any jurisdiction, the laws of which imposes prohibition
on soliciting the securities business in that jurisdiction without going through the registration requirements and/ or prohibit the use of any information contained in this report. This Report and its respective
contents do not constitute an offer or invitation to purchase or subscribe for any securities or solicitation of any investments or investment services and/or shall not be considered as an advertisement tool. "U.S.
Persons" are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed "US
Persons" under certain rules.

February 5, 2018 Analyst: AshutoshTiwari ashutosh@equirus.com (+91-8128694112, +91-79-40504017) Page 11 of 11