Lava Essentials

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ISIN

INE745X01022

Face Value

₹5.00

Total Share

54,11,26,216

Total Income

₹5,898.01 Cr

Profit After Tax

₹186.87 Cr

EPS

₹3.54

P/E

37.57

P/B

3.71

Market Capitalisation

₹7,196.98 Cr

Enterprise Value

₹7,430.55 Cr

Book Value

₹35.83

Intrinsic Value

₹33.22

Earnings Yield

2.66 %

Sector

Information Technology

Sub-sector

Technology Hardware

Category

Pre IPO

Cashflow - Operations

₹55.32 Cr

Cashflow - Financing

₹164.30 Cr

Lava Growth

Compounded Sales Growth

  • 6.62%

    1 Year

  • 5.14%

    4 Year

  • -3.48%

    6 Year

Pro Only

Compounded Profit Growth

  • 8.26%

    1 Year

  • 36.68%

    3 Year

  • -5.80%

    6 Year

Pro Only

Return On Equity

  • 9.64%

    2022

  • 8.09%

    2020

  • 19.68%

    2017

Pro Only

About Lava

  • Lava International Limited ("Lava") manufactures and trades in mobile phones, storage devices and other telecommunication devices. It offers smart phones, feature phones, laptops, tablets and accessories.  
  • The company has been building mobile handset design capability including industrial design, mechanical design, hardware design & software design. Lava and Xolo are two brands that operate under the parent company.
  • It is headquartered in Noida, India, and has overseas operations in Thailand, Nepal, Bangladesh, Sri-Lanka,  Indonesia, Mexico, and the Middle East. The company also has an in-house research and development center and manufacturing facilities in Noida.
  • With this 'Design in India' initiative, Lava is now the only Mobile handset company that makes truly “Make In India” phones with complete control on design and manufacturing within India. Lava has two manufacturing plants in India and the company claims to be the only Indian brand to design devices in India and do PCB SMT in its own factory. 
  • The handset-maker a couple of years ago had 50 products  (about 20 smartphones and some 35 feature phones) in its portfolio which has now brought down to less than 15 phones  (five smartphones and nine feature phones).  
  • The company was founded in 2009 as an offshoot of a telecommunication venture by Hari Om Rai, Sunil Bhalla, Shailendra Nath Rai, and Vishal Sehgal.

  • Lava IPO Details

  • Lava international filed a DRHP to raise Rs 1400-1500 crore approximately from the market. Also, the shareholders are going to sell a total of 43,727,603 shares during the IPO. The company said it might also hold a private placement round to raise Rs 100 crore ahead of the IPO.

Lava
Offer for Sale

₹ 896.00 Cr

Lava
Fresh Issue

₹ 500.00 Cr

Lava
Total IPO Size

₹ 1396.00 Cr

  • Lava Merger & Acquisition

Acquisition

  • Lava acquired the panama based B mobile group for the consideration of US$ 50.54 million in FY22.
  • Lava Subsidiaries

  • Lava Enterprises Limited
  • Sojo Distribution Private Limited
  • Sojo Manufacturing Services (AP) Private Limited
  • Sojo Manufacturing Services Private Limited
  • XOLO International (HK) Limited
  • Lava International (H.K.) Limited, Hong Kong (“Lava International (H.K)”
  • Lava Technologies DMCC
  • Lava Technologies LLC
  • China Bird Centro America, S.A
  • Lava Mobility (Private) Limited, Sri Lanka
  • Lava International (Nepal) Private Limited
  • Lava International DMCC
  • Lava Mobile Mexico
  • Lava International (Myanmar) Company Limited
  • PT. Lava Mobile Indonesia, Indonesia
  • Lava International (Bangladesh) Limited, Bangladesh

Lava Business Model

  • Lava Enterprises is engaged in the business of inter alia, manufacturing, buying, selling, erecting, commissioning, exporting, importing, hiring and servicing of electronic, telecommunication and electrical equipment. 
  • Sojo Distribution is engaged in the business of inter-alia, manufacturing, distribution, online B2B & B2C portals, agents, service commission agents, wholesaler, retailers, sales and repairing network dealers of all types of mobiles, laptops, softwares, electronic gadgets, electronic and electrical appliances, communication equipment, spares, accessories, components and other related products, components.
  • Sojo Manufacturing Services (AP) is engaged in the business of inter-alia, manufacturing, trading, import-export, consulting services, erect, commissioning, hire, licensing services, information service provider of all type of electronics, telecommunication, digitalised, gadgets, gaming machine, virtual reality gadgets, gaming software, software applications, electrical, or any type of integrated equipment including their printed circuit boards, wiring, pads, modules, sub-assemblies, spares and components. 
  • XOLO International (HK) was incorporated as a private company limited by shares, on February 10, 2015 under the laws of Hong Kong(Companies Ordinance). XOLO International (HK) is currently engaged in the business of smartphones and accessories trading.
  • Lava International (H.K.) is currently engaged in the business of trading in mobile phones and investment holding.
  • Lava Technologies DMCC (Dubai) is currently engaged in the business of mobile phones and accessory trading.
  • Lava Technologies LLC, USA is engaged in the business of manufacturing, trading and distribution of consumer electronic products such as mobile phones, tablets and accessories.
  • China Bird is currently engaged in the business of trading and distribution of telecommunications equipment in Latin America.
  • Lava Mobility (Private) is currently engaged in the business of providing marketing services to the Company.
  • Lava Revenue Segmentation

  • Sale of mobile handset
  • Sale of services
  • Others
  • Lava Product & Services

  • Mobile Phones
  • Tablets
  • Data cards
  • Chargers
  • Smart bands and smart watches
  • Lava Pay
  • Lava Pulse
  • Audio products(headphones and speakers)
  • Lava Assets

Assets (FY22)Amount in (₹ Cr)
Total Receivables1292.12 
Inventory682.88
Intangible Assets222.01
Property Plant & Equipment161.92
Bank Balance60.19
Cash42.70

  • Lava Industry Overview

Industry Statistics

Overview:

  • The information technology (IT) sector is comprised of companies that produce software, hardware or semiconductor equipment, or companies that provide internet or related services. In India, IT and ITES industry is divided into four major segments – IT services, business process management (BPM), software products and engineering services, and hardware.
  • India Smartphone market size was valued at US$ 139 billion in 2021, and is expected to grow with a CAGR of 10.5% and reach US$ 281 billion by 2028. The mobile phone market, for less than ₹ 5,000 range is projected to grow from approximately 142 million handsets sold in FY21 to approximately 217 million mobile handsets sold by FY26, growing at a CAGR of 8.8%.
  • The average selling price (ASP) of smartphones has touched the all-time high of $211 (₹16,323) in the January-March quarter in FY22.
  • In terms of origin, Chinese brands have the largest market share compared to Indian and foreign brands. However, the majority of these players have their own production facilities in India. Indian players are expanding market to Tier II and Tier III cities as well as the rural areas, where the growth is project to be significant.
  • As per an analysis by Frost and Sullivan(F&S), India's market for smartphones comprised of 143.3 million units in FY21 compared to 110.8 million units for feature phones in 2020. The analysis also ascertains that Middle East, Africa and India account for over 68% of the global feature phone demand. According to F&S, Lava International is the third largest feature phone company in India with a market share of 13.4%, in terms of sales volume in the financial year 2021.
  • For the IT hardware industry, Ministry of Electronics & Information Technology (MeitY) has notified "Electronics and Information Technology Goods (Requirement for Compulsory Registration) Order, 2012" as per which no person shall manufacture or store for sale, import, sell or distribute goods which do not conform to the Indian Standard.

Competitive Landscape:

  • Samsung continues to dominate the global market for smartphones accounting for an estimated 19% of the total smartphone shipments globally.
  • Additionally Samsung has invested nearly ₹20 billion in last 3-4 years for setting up the largest mobile manufacturing plant in India. It is planning to  further invest around ₹50 billion on smartphone display manufacturing. 
  • Dixon Technologies, an EMS player, is setting up its 11th manufacturing plant in Noida for assembling of mobile phones, which was slated for opening in January 2021 with an investment of around ₹0.75 billion.
  • Oppo mobiles has already invested around ₹22 billion for setting up its plant in Greater Noida along with expansion of few production lines.
  • The PLI scheme has also paved way for TATA group, one of the conglomerates in India to enter into the mobile phone industry. The company is planning to invest nearly INR 110 Billion to set up a mobile phone and component manufacturing industry in India via its subsidiary TATA Electronics.

Future Prospects

  • According to an analysis by Frost and Sullivan, India's mobile phone market is expected to grow at a CAGR of 13.6% from FY20 to FY25 increasing from US$ 18.5 billion in FY20 to US$ 34.9 billion in FY25.
  • As per GSMA, India is on its way to becoming the second-largest smartphone market globally by 2025 with around 1 billion installed devices and is expected to have 92 Cr. unique mobile subscribers by 2025 which will include 9 Cr. 5G connections.
  • India is set to export mobile phones worth US$ 9 billion in FY23. 

Government Initiatives

  • The Ministry of Electronics and Information Technology (MeitY) outlay for Digital India program in the Union Budget for FY22-23 jumped 67.13%. Around ₹10,676.18 crores has been allocated this year for the programme, up from ₹6,388 crores last year in Union Budget FY22 IT & Electronics.
  • The mobile manufacturing sector is open for 100% foreign direct investment. FDI in the telecommunication sector during FY22-23 (April to September) was US$694 million compared to US$668 million during FY21-22. However, Chinese firms have been dominating the list of investors. Brands such as Oppo, Vivo, and Xiaomi were the prominent Chinese investors, while Samsung, Apple and Taiwanese contract manufacturer Foxconn were among others.
  • The Union budget, 2018-19 raised the customs duty on mobile phones again from 15% to 20% to encourage domestic manufacturing of mobile phones.
  • The PLI(Production-linked Incentive) scheme offers incentives of 4-6% on incremental sales of mobile phones manufactured in India to eligible companies for a period of five years from the base year (2019-20). High-end manufacturers or companies producing handsets worth over Rs. 15,000 (~US$ 200) must sell goods worth Rs. 4,000 crore (~US$ 550 million) or more to avail the subsidy in 2020-21.
  •  The NPE 2019, approved by the union cabinet, has set an ambitious target of manufacturing goods and offering services worth Rs 26 trillion by 2025 and half of it is expected to come from a robust mobile handsets sector. The policy relies heavily on the success of the mobile manufacturing ecosystem in the country. The policy is aimed at manufacturing 1 billion handsets locally, valued at Rs 13 trillion, by 2025 that would include the export of 600 million devices worth Rs 7 trillion.

Lava Awards & Achievements

  • Most Trusted Brand – CMR Retail Sentiment index 2018
  • Golden Peacock Awards – Innovative product and services 2018
  • Best customer experience team of the team by Kamikaze B2B Media

Lava Strengths

  • LAVA is an end-to-end focused mobile handset and mobile handset solutions company with presence in emerging markets such as Thailand, Sri Lanka, the Middle East, Bangladesh, Mexico, Indonesia and Nepal. 
  • It is the third largest feature phone company in India with a market share of 13.4% in terms of sales volume in FY21. It was also the fifth largest feature phone company in the world with a market share of 5% in terms of sales volume in FY20.
  • Revenue is generated not only by domestic but also from the international market. In FY21 29.33% of revenue was from the Indian market and 70.67% from the international market which creates a diversified revenue segmentation.
  • With strong research and development LAVA has successfully developed the first smartphone in the world that can be customized by customers - myZ in FY21. 
  • Large-scale State-of-the-Art manufacturing, quality service capabilities and leading technology provides them with a competitive edge in mobile phone manufacturing in India. Noida capacity holds the capability of producing 42.52 million Feature Phone Equivalent handsets per annum in FY21.
  • With the help of extensive distribution network supported by advanced information technology capabilities they have established extensive distribution network through general trade, online/e-commerce, organized/modern-trade and B2B channel. The domestic network consisted of 893 active distributors and 116,339 active retailers in FY21.

Lava Shortcomings

  • Cost of procurement of of handsets, components and spare parts for mobile handsets constitute the largest part of the cost structure as it takes more than 80% of the revenue, which is because they depend on the third-party vendors and suppliers for the supply of raw materials.
  • Revenue generation from the diversified international market increases the volatility due to the segmented revenue structure.

Lava Opportunities

  • The global smartphone market size was valued at USD 457.18 billion in 2021. The market is projected to grow from USD 484.81 billion in FY22 to USD 792.51 billion by FY29, exhibiting a CAGR of 7.3% during the forecast period.
  • India’s mobile phone subscription market is projected to grow from 1,181 million subscriptions for the financial year FY21 to an estimated 1,369.1 million subscriptions for the financial year FY26 at a CAGR of 3.0%. A sizeable number of users will shift from feature phone to entry level smartphones in India due to availability of better features at incremental cost, rising affordability, increase in discretionary spending, availability of uninterrupted mobile data connectivity.
  • Recent contracts with NOKIA and Motorola for the manufacturing and distribution of smartphones and the acquisition of panama based B mobile which will provide the access to an established market and customer base in 31 Latin American countries.
  • According to India Cellular and Electronics Association (ICEA) total manufacturing of electronic products is expected to rise by US$ 300 billion in FY26 from US$ 87 billion in FY22. India is expected to export mobile phones worth US$ 9 billion in FY23.

Lava Threats

  • Competition from the large and established competitors against which they may fail to compete successfully, which can reduce demand for the products and services which may lead to reduced prices and profit margins which can further result in loss of market share.
  • The company has a customer base which is highly price sensitive. Hence the company has to price their products competitively in order to capture a wider market, but offering products at lower prices is not always a viable solution as it affects the profitability of the company.
  • The company is likely to face a stiff competition, at every segment of the current market, from brands like Xiaomi, OPPO, Realme, Micromax, Honor, Oneplus, Samsung etc.

Lava Rating

  • RECOMMENDATION

    Strong Buy

  • Lava Detail Info

Industry Statistics

PUBLIC LIMITED

Registered In

India

last Updated

18/12/2022

Registered Date

27/03/2009

Planify Ticker

LAVA

Reg Office: B-14, HOUSE 2 , BASEMENT, SHIVLOK COMMERCIAL COMPLEX, Karampura Delhi, West Delhi, DELHI, INDIA – 110015

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