Lumax Industries Limited : Do better options exist amongst the peer group?

Lumax Industries Limited has moved from NEUTRAL to OVERVALUED

It has a Fundamental Analysis Score of 25 and a Capital Cube Implied Price of 256.18 INR

Relative Valuation

Lumax Industries Limited’s price of INR 336 is greater than CapitalCube’s implied price of INR 256.18. At this level, CapitalCube believes that Lumax Industries Limited is overvalued. Over the last 52 week period, the stock has fluctuated between INR 285 and INR 477.90.

Relative Valuation

Company Overview

  • Relative underperformance over the last year and the last month suggest a lagging position.
  • Lumax Industries Limited currently trades at a higher Price/Book ratio (1.81) than its peer median (1.44).
  • The market expects 517206-IN to grow at about the same rate as the peers and to maintain the median returns it currently generates.
  • 517206-IN has relatively low profit margins and median asset efficiency.
  • Compared with its chosen peers, the company’s annual revenues and earnings change at a slower rate, implying a lack of strategic focus and/or lack of execution success.
  • 517206-IN‘s return on assets currently and over the past five years has trailed the peer median and suggests the company might be operationally challenged relative to its peers.
  • The company’s median gross margin and relatively low pre-tax margin suggest high operating costs versus peers.
  • 517206-IN‘s revenue growth in recent years and current PE ratio are both around their respective peer medians suggesting that historical performance and long-term growth expectations for the company are largely in sync.
  • The company’s capital investment seems appropriate for a business with peer median returns.
  • 517206-IN seems too levered to raise additional debt.

Investment Outlook

Lumax Industries Limited has a fundamental score of 25 and has a relative valuation of OVERVALUED.

Lumax Industries Limited is on the bottom right quadrant of CapitalCube’s Value – Price Matrix. We therefore classify Lumax Industries Limited as ‘Speculative’. In other words, not only is Lumax Industries Limited’s Fundamental Analysis Score low at 25, but it is also potentially overvalued, in that it trades at a price higher than its CapitalCube Implied Price of 256.18.

Fundamentals Vs Relative Valuation

Drivers of Valuation

The market expects 517206-IN to maintain the median rates of return it generates currently.

The market expects 517206-IN to grow at about the same rate as its chosen peers (PE of 16.49 compared to peer median of 17.06) and to maintain the peer median return (ROE of 11.12%) it currently generates.

The company currently trades at a higher Price/Book ratio of 1.81 compared to its peer median of 1.44.

Valuation Drivers

517206-IN has moved towards a median ROE and PE from a Turnaround profile at the recent year-end.

ROE % (On Common Equity)
Price To Earnings

Peer Analysis

A complete list of valuation metrics is available on the company page.

Company Profile

Lumax Industries Ltd. is a manufacturer and supplier of auto components mainly automotive lighting systems for four wheelers and two wheelers applications. Its products include head lamps, tail lamps, sundry lamps and auxiliary lamps. Lumax Industries was founded by Sagar Chand Jain in 1945 and is headquartered in New Delhi, India.

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