Lumax Industries Ltd Q2 FY2025 Concall Summary

Key Takeaways

• Growth held up, margins lagged: Revenue guidance of 15–20% for FY25 was maintained, but EBITDA margin remained suppressed by fixed-cost absorption delays and LED import content, with a jump promised only from Q4.
• The order book is EV-heavy and deepening with Maruti: 35% of the order book is for EVs, and Lumax has won all five of Maruti Suzuki’s next planned models, spanning three new SUV platforms.
• Chakan Phase 1 is the growth engine, but it is running at just 55–60% utilization: The facility drove 46% revenue growth with Mahindra and 26% with Tata Motors in H1, yet low utilisation and a drop in XUV700 production have weighed on margins.
• Debt has peaked and capex will fall 30% next year: Management called the current debt level the maximum and guided for a declining trend from FY26, helped by higher growth and a much reduced capex outlay.
• What to watch next quarter: Whether the Thar ROXX ramp-up from January delivers the promised sizable Q4 revenue jump, and whether the Q4 margin lift actually materialises after another suppressed Q3.

Demand Environment & Segment Performance

• PV industry slowed, but Lumax stayed ahead: The passenger vehicle segment is expected to register only low single-digit growth for the full year, yet Lumax maintained its 15–20% revenue growth guidance on the back of new model launches and content gains.
• 2-wheeler strength continued: Growth was strong, particularly from rural markets, supported by improving rural incomes and infrastructure development.
• CV remained subdued: The segment was challenged in the short term, though management sees robust mid-to-long-term demand tied to infrastructure spending.
• H1 demand was hit by transient headwinds: Uneven rainfall, extreme heat, a temporary capex slowdown around elections, and the Shraddh period falling entirely in September all softened market activity.
• Customer-level divergence was stark: Mahindra’s own volumes grew 8% while Lumax revenue to Mahindra grew 46%; Tata Motors’ volumes declined 5% but Lumax revenue grew 26%, both driven by the new Chakan facility. HMSI grew 33% but Lumax revenue grew only 13%, held back by an unfavourable model mix.

Order Book & New Business Wins

• LED now dominates the pipeline: LED share of business reached 47% (up from 36% in H1 FY24), and 87% of the order book is LED.
• Maruti Suzuki relationship deepened decisively: Lumax has been awarded all five of Maruti’s next planned models, covering almost three new SUV platforms including facelifts of current SUVs.
• New model launches in Q2 included the Thar ROXX: Lighting systems were launched for the Thar ROXX (Mahindra), Magnite (Nissan), and a new Neo model (Mahindra).
• EV content is material and growing: 35% of the order book is for EV vehicles, and 74% of the order book sits within the passenger vehicle segment.

Anmol Jain: "I'm glad to share that out of the next 5 models of Maruti Suzuki, which are in the planning stages, Lumax has been awarded businesses for all the 5 models, which constitute almost 3 new SUV platforms, including facelifts of current SUVs."

Margins: The Suppression & the Recovery Promise

• LED margin dilution has a specific mechanism: LED carries roughly 10% higher raw material consumption than non-LED due to higher import content. The INR125 crores of incremental LED revenue contribution was offset by additional fixed costs and low capacity utilisation at the new Chakan and Gujarat facilities.
• Chakan Phase 1 utilisation hurt margins: Fixed costs were incurred but XUV700 production dropped significantly during the quarter, though it has since been restored.
• The Gujarat facility was built ahead of demand: The company geared up for a Maruti Suzuki EV model that was delayed by two quarters and pushed into FY26, leaving fixed costs unabsorbed.
• Other income fell sequentially: Q1 included INR6.5 crores of prior-year subsidy booked when the final eligibility certificate for the Sanand facility was received; Q2 booked only the normal quarterly subsidy.
• The margin jump is promised from Q4: Management expects suppressed margins to continue through Q3, with a correction and a visible jump in EBITDA margins starting in Q4 of this financial year.
• FY26 should cross double-digit EBITDA: Operating EBITDA margin is expected to surpass 10% in FY26, driven by operational efficiency, higher capacity utilisation, and greater LED penetration.
• The midterm vision remains 12% EBITDA: Management reaffirmed the target of reaching roughly 12% EBITDA over the next three years.

Anmol Jain: "We do foresee that by quarter 4 will stand corrected. And hence, you will start seeing a jump in the EBITDA margins from quarter 4 of this financial year onwards."

Capacity Expansion & Capex

• Chakan Phase 1 is at 55–60% utilisation: The facility currently caters primarily to Mahindra & Mahindra and Tata Motors, with key models including the XUV700, Scorpio-N, and Thar ROXX.
• Chakan Phase 2 investment begins in FY26: Start of production is expected in Q2 FY26, aligned with OEM model launches from Mahindra, Volkswagen, and Tata Motors.
• Gujarat brownfield expansion was deferred by two quarters: Originally planned for Q3 FY25, it is now expected to be streamlined by Q1 FY26 because of model launch delays.
• Capex will fall 30% next year: FY25 capex guidance remains unchanged at INR200–230 crores; FY26 will see a much reduced outlay, with management guiding for a roughly 30% reduction in total annual capex.
• Peak revenue from current investments is targeted for FY28: On an annualised basis, Chakan Phase 2 and Sanand capacity together are expected to reach close to INR1,000 crores in peak revenue, realised somewhere in FY28.

Operational Levers & the Thar ROXX Catalyst

• Thar ROXX volumes are set to nearly double from January 2025: Customers want to ramp production to almost twice current levels, which management expects to drive a sizable revenue increase from Q4 onwards with only minimal additional investment.
• Make-or-buy and consolidation are active margin levers: The company is investing in critical in-house processes while outsourcing certain non-core activities to supplier partners, and is consolidating processes and moving products between plants to improve capacity utilisation and fixed-cost absorption.
• The mould business surged but margins are uneven: H1 mould revenue was up 160% versus H1 last year, though profitability varies significantly from tooling to tooling.

Guidance & Commitments

Key Metrics