Lumax Auto Tech.

Frame Assy : Model - Wind-125 Frame Assy : Model - CT-100 Exhaust Muffler : Model - Pulsar Muffler Assy : Model - Wave Silencer Assly - Spirit 4S Petrol Tank Assy : Model - Spirit Handle Bar Assy : Model - Wave Fork Assly - Spirit 4S Cable type Gear Shift Lever Rod Linkage type Gear Shift Lever Parking Brake

1.) Revenue Breakup : 2W (Bajaj Auto) = 55% - 60% 4W = 40% - 45% 2.) Co. is a "single source supplier" to its customers. 3.) Till 2007, almost all the revenues used to come from Bajaj Auto. 4.) Cos. Sales have increased 12.5x during the last 8 years from less than Rs.60Cr. in FY04 to Rs.750Cr. in FY12. 5.) Current Average Capacity Utilization - 80% - 85% 6.) The co. can "pass on" input price increases to its customers. 7.) After market sales (replacement market) = Rs.130Cr. (~ 17.5% of Total Sales) 8.) Co. has a market share of 65% in "Gear Shift Assembly". 9.) The co. is planning to set up a greenfield plant in Banglore for HMSI with a capital outlay of Rs.80Cr. 10.) FY13E Sales growth = 15%....................................................(Management Guidance) 11.) FY14-20E Sales CAGR = 20%....................................................(Management Guidance) 12.) FY20E PBT Margin = 10%....................................................(Management Guidance) 13.) The USP of this co. is that it has been able to sustain a sales CAGR of 37% during the past 8 years primarily through internal accruals. In other words, although the sales have grown from Rs.60Cr. in FY04 to Rs.750Cr. in FY12, the equity capital infused during this period was less than 30Cr. & at the end of this period (31/03/12), the co. has Net Cash of around Rs.35Cr. 14.) During the past 3 years the co. is producing operating cash flows of around Rs.50Cr. 15.) Promoter has 50 years experience in auto ancillary industry.  16.) Valuations : TTM  CMP = Rs.141/- MCap = Rs.192Cr. Cash + Quoted Investments = Rs.54Cr.  EV = Rs.138Cr. EBITDA = Rs. 70Cr. EV / EBITDA = 1.97x PE = 3.7x Div. Yield = 4.25% RoE = 30%

Haldyn Glass

1.) DOMESTIC CONTAINER GLASS INDUSTRY :

Market Size = Rs.6500Cr.

Volumes ~ 9350 TPD (post addition of 1775 TPD capacity YTD)

2.) Around 10% of the industry production is exported.

3.) Around 2/3rds of the industry production is consumed by Liquor Industry followed by F&B and Pharma. Liquor segment contributes around 85% of Haldyn's revenues. 

4.) Listed Peers : Capacity

Hindustan National Glass - 4300 TPD (largest domestic glass manufacturer)

Piramal Glass Ltd. - 545 TPD (PGL is only focused on C&P segment & pharma and is absent in the liquor packaging segment)

HSIL - 1600 TPD (second largest player in India & claims to have 22% market share. Has 2 Andhra based plants.)

Haldyn Glass Ltd. - 320 TPD (based in Gujarat)   

5.) Power & Fuel Expense / Sales :

HNG - 33.5% (as HNG uses more Electricity & less gas)

PGL - 18.2% (not comparable as realizations are higher in C&P segment)

HSIL - 20.6% (not comparable as ceramics division contributes to around half of the revenues)

HGL - 12.5% (as HGL gets cheap gas from GAIL and ONGC) 

6.) Cost of LPG per unit :

HNG - Rs.23-30/- per scm 

PNG - Rs.16.68/- per scm

HGL - Rs.11.15/- per scm

7.) Total Capacity addition in CY12 = 1825 TPD (24% of existing capacity at the start of CY12)

HSIL has added 475 TPD capacity in AP & HNG has set up two 650 TPD plants in Nasik & AP. The Nasik plant is supposed to cater to the West Indian market.

HGL is also expanding capacity by 50 TPD by year end.

8.) CYCLICAL NATURE OF CONTAINER GLASS INDUSTRY  : 

Due to huge capacity coming onstream, the realizations & margins of HGL might suffer.

HGL's EBITDA Margins increased from 24.5% in FY12 to 30% in Q1FY13.

Only PGL enjoys these kinds of margins due to presence in the C&P segment where realizations & margins are high.

HSIL & HNG both had OPM of around 16% in FY12.

HGL is posting an OPM of over 20% since FY05.

Demand should also grow by 10% p.a. so the demand might bail out the glass packaging industry from excess capacity. 

9.) At current realizations, if HGL maintains 25% OPM than the co. can make an EBITDA of Rs.50Cr. in FY14.

10.) CMP = Rs.19/-

MCap. = Rs.102Cr.

EV = Rs.110Cr.

11.) The best case scenario for HGL will be if "Power & Fuel" costs shoot up for the industry but remain constant for HGL under APM.

12..) Portfolio Weightage - 1%