Lumax Auto extends fall to 3rd day, slips 5% despite issuing clarification

The company said it has received information that certain entities are circulating unsolicited / unauthorised SMS / Whatsapp messages regarding the shares / securities of the Company.

Shares of Lumax Auto Technologies (LATL) slipped 5 per cent to Rs 245.05 on the BSE in Wednesday’s intra-day trade even after the company issued clarification on circulation of unsolicited / unauthorised messages related to its shares. 

The stock of auto components & equipments company was trading lower for the third straight day, down 9 per cent during the period. In comparison, the S&P BSE Sensex was down 0.59 per cent at 59,061 at 01:20 pm. The stock had hit a record high of Rs 312 on September 15, 2022.

LATL said that the company has received information that certain entities are circulating unsolicited / unauthorised SMS / Whatsapp messages regarding the shares of the company.

"We strongly condemns the circulation of such unsolicited / unauthorised messages. Circulation of such posts is not only detrimental to the interest of investors but also adversely affects the integrity of the securities market," the company said in an exchange filing. CLICK HERE FOR RELEASE

Lumax-DK Jain Group a leading player in the Indian Automotive industry is a provider of a wide range of automotive solutions (Lighting Module, Frame Chassis, Integrated Plastic Modules, Gear Shift Lever, Shift Tower, Power Window Switches, Oxygen Sensors, Intake systems, Seat Frames, Urea Tank, etc.).

With a market leadership in Automotive Lighting solutions and Gear Shift levers, Lumax has been the preferred supplier to almost all the leading OEMs in India.

Meanwhile, between February 20-27, the stock price of LATL had surged 22 per cent after the company announced that it will be acquiring 75 per cent equity stake in International Automotive Component’s (IAC) India business at an enterprise value of Rs 587 crore.

LATL is expected to fund the acquisition value of around Rs 450 crores (for 75 per cent equity stake) through debt. LATL will set up a special purpose vehicle (SPV) for the acquisition. The acquisition of IAC is expected to be completed by end of March 2023. IAC India recorded revenues of around Rs 470 crore during the nine month ending fiscal 2023 with EBITDA margins of 15 per cent.

The acquisition of IAC is expected to be beneficial for the business risk profile of LATL as IAC derives majority of its revenues from passenger vehicles (PVs) which will complement the two-wheeler dependent revenue profile (38 per cent revenues in 9M-FY23) of LATL.

On February 28, CRISIL Ratings upgraded its rating on the long term bank loan facilities of LATL to ‘CRISIL AA-/Stable’ from ‘CRISIL A+/Positive’. The rating on the commercial paper programme is reaffirmed at ‘CRISIL A1+’.

The rating agency believes that Lumax group's revenue will grow at a steady pace over the medium term along with steady margins, supported by its diversified product mix and established customer base. The group's financial risk profile is expected to remain healthy supported by healthy growth in cash accruals, modest capex and working capital requirements.

The upgrade also factors in better than expected performance of LATL in the first nine months of fiscal 2023 driven by healthy offtake from OEMs especially in the PV segment while the 2W segment also recovered post de-growth in fiscal 2022.

The growth comes on the back of a healthy 35 per cent year on year growth witnessed during fiscal 2022 driven by healthy demand scenario including pent up demand, strong aftermarket demand and increase in wallet share with its major customers.

LATL’s subsidiaries, which are engaged largely in import-substitute auto components, improved their performance given the increasing demand for safety, emission and comfort requirements in automobiles, the rating agency said in a rationale.