We are talking about Lava International, which has re-entered the market with its flagship brand ‘MyZ’, with phones priced in the Rs 6,999-10,500 range.
The stock has been trading at Rs 400-425 in the unofficial market for unlisted shares, rising from Rs 200-220 a couple of months ago. At current price quoted in the unlisted space, the company is valued at Rs 3,600 crore, just 0.7 times its revenue.
The company reported Rs 5,264 crore revenue for the year ended on March 31, 2020, compared with Rs 5,108 crore a year ago. The company managed a net profit of Rs 107 crore on that revenue, compared Rs 73 crore in the previous year.
Off-market share dealers said amidst anti-China sentiment, the company is eyeing feature phone users who may be looking to upgrade to smartphones. It has set sights on the lower budget segment.
Divyanshu Aggarwal of Growfast Securities & Credit, a Delhi-based boutique firm, said the 4-6 per cent PLI incentive will attract more capex. “Also, the company has seen a remarkable increase of 55 per cent in profit for the FY2020,” Aggarwal pointed out.
The government has been working actively on making India an alternative manufacturing hub to China and has announced production-linked incentives and other benefits.
Besides riding the ‘Make in India’ wave, Lava’s comeback strategy is to replicate the success of Chinese smartphone makers by offering phones with top-notch specifications at lower price points.
The company is targeting the millennials of tier II and III cities with an ‘online first’ strategy for retailing. However, dethroning Chinese players is not going to be a cakewalk, as they command over three-fourth market share.
The smartphone market share of Lava was 6 per cent in 2015, according to Counterpoint Research, which dwindled to below 1 per cent in 2020.
Umesh Paliwal, Co-founder of UnlistedZone, said the company is completely focused on mobile manufacturing. “It is focusing on 5G mobile phones in the budget segment. This is likely to be a big push going forward,” he said.
There is a buzz doing the rounds that company is considering a public listing in a bid to tap the abundant liquidity and risk appetite on Dalal Street. ETMarkets.com could not independently confirm the news.
“Replacement demand in the mobile industry is another big factor for Lava,” said Paliwal. “A mobile phone usually gets replaced within a year or two. It will require rapid and large scale production,” he said.
Finance Minister Nirmala Sitharaman on Monday proposed to impose import duty on components of mobile phones and chargers to enhance local value addition. The FM announced review of 400 old customs duty exemptions, including those applicable on the mobile devices segment.
Lava International is headquartered in Noida. The company has overseas operations in 11 countries including Thailand, Nepal, Bangladesh, Sri Lanka, Indonesia, Mexico and some West Asian countries.
