Target: ₹183
CMP: ₹160.65
Lumax Auto Technologies Ltd (LATL) Q4-FY22 results were in line with our estimates on account of robust sales growth and operating leverage benefit despite intense raw material inflation. We understand, going forward, gradual pick up in economy and preference toward personal mobility is likely to drive robust demand from Auto OEM in FY23 and FY24.
We expect LATL to report robust aftermarket performance due to pent-up demand and anticipate double-digit growth across its entire business segment, going forward. We retain our PAT estimates for FY23 and FY24.
The management anticipates positive business momentum across its business segment, going forward, with pick up in two-wheeler and four-wheeler OEMs. We believe LATL is well positioned itself to benefit from Auto OEMs growth over FY22-24. We expect the company to report 15.9 per cent sales CAGR and 22.7 per cent PAT CAGR over FY22-24.
We forecast sales growth of 17.8 per cent and 14.1 per cent for FY23 and FY24 respectively on the back of robust recovery in the domestic two-wheeler and four-wheeler market.
The company is expected to report EPS of ₹18.2 in FY24. We change our rating from Hold to Buy with revised target price of ₹183 based on PER of 10x FY24 EPS.