Is LUX a good long term investment call right now?

This post is not for traders who want to trade with stop loss. This is for long term investors who wants to buy fundamentally strong beaten down names at a good entry point.


Lux Industries Limited was incorporated in 1995 and has emerged as one of the largest players in the hosiery business having a market share of 14% of the organised industry. It is the largest mid-segment hosiery enterprise in India. The Company has more than 100 products across 16 brands to address the growing need of customers. Company’s products are available in ~4,50,000 retail points spread across India.

Why is it a good buy right now?

Average ROE (Return on Equity) for last 3, 5, 7 and 10 years is greater than 30%

5year CAGR (Compound annual growth rate) Sales and Profit at 16% and 40%

TTM (Trailing 12 months) Sales and Profit growth at 30% and 67%

Promoter Holding at 74% (greater than 45% is good)

Dividend Yield at 0.49% (consistent dividend payer)

Debt to equity at 0.12 (less than 1 is good), Interest Coverage at 51.5 (greater
than 3 is good), Current ratio at 2.78 (greater than 1.5 is good), FCF to CFO at 71%
(company won’t have to raise debt for expansion)

Debtor Days came down from 132 in 2018 to 85 in 2021

Current PE at 19.4 is much lesser than 10-year average PE of 31

It is currently trading at a long-term support point. If anyone consider it for buying, put only 3% of your capital right now, buy with another 3% if it falls another 40% and invest the rest 4% (don't invest more than 10% of your entire capital in one stock) when the share closes at a 52 week high.


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