Lava Share Price in Unlisted Stock Market in India 2024

Contents

Lava International Limited is a multinational company that designs, manufactures, markets and supports mobile devices. Headquartered in Noida, Uttar Pradesh, the company has operations across India and several other countries. Lava was founded in 2009 and has emerged as one of the leading Indian mobile handset companies over the past decade.

In this comprehensive blog post, we will provide an in-depth analysis of Lava Share Price, business, financial performance, valuation, investment potential, risks and challenges. The aim is to help readers understand the key factors impacting Lava share price and make an informed decision on whether it is worth buying the company’s unlisted shares.

Company Overview

Lava International Limited is part of the Lava Group of companies founded by Hari Om Rai, Shailendra Nath Rai, Vishal Sehgal and Sunil Bhalla in 2009. The company designs, manufactures, markets and supports mobile handsets as well as tablets, feature phones and related accessories.

Headquartered in Noida, Lava has presence across India with regional offices in major cities and towns. The company has overseas operations in Thailand, Bangladesh, Sri Lanka, Pakistan, Indonesia, Mexico and Russia among others. Lava has manufacturing facilities in India and China.

Business Overview

Lava operates primarily in the mobile handset segment, offering a range of feature phones, smartphones and tablets at affordable price points. The company has focused mainly on the budget smartphone space in India but has been expanding to cover all price segments and product categories.

Some of Lava’s key business activities include:

Design and development of mobile devices including smartphones, feature phones and tablets
Manufacturing of mobile devices at company-owned facilities in India and China
Marketing and distribution of Lava-branded mobile devices across online and offline retail channels
After-sales service support to customers across its retail presence and service centers
Development of software applications and services for Lava devices
Brand building and promotion to drive adoption of Lava products

Business Model and Operations

Lava operates on an asset-heavy model with its own manufacturing facilities, product design team and pan-India distribution network. The company has invested significantly in R&D and its manufacturing infrastructure over the years.

Lava procures components from external suppliers, designs & develops software and hardware in-house at its R&D centers, manufactures at company facilities and then distributes to retail channels across India and global markets via distributors and partners.

After-sales service is provided across its wide service network. The company also invests in brand building through advertising and promotions. Its key manufacturing facilities are located at Noida in Uttar Pradesh.

Products & Services

Lava offers a diversified range of mobile devices across various price segments:

Feature Phones: A range of basic, affordable feature phones with keypad and basic functions
Smartphones: Entry level to high-end smartphones priced Rs 5,000 to Rs 25,000 covering both Android and Windows platforms
Tablets: Budget tablets with calling and data connectivity priced Rs 5,000 onwards
Accessories: Range of mobile accessories such as protective cases, headphones, power banks, chargers etc.
Value Added Services: Apps, entertainment services, digital content offered on Lava devices

Principal Business Activities

Lava’s principal business activities include:

Design and Development: In-house product design, software development and integration done at Noida facility
Sourcing & Procurement: Components sourced from leading suppliers based on quality and cost efficiency
Manufacturing: Own manufacturing plants in India and China where devices are assembled
Quality Control: Rigorous testing and quality control before products are packed and shipped
Marketing: Through extensive distribution network of retailers, distributors and online partners
Customer Support: Pan India service network and call centers for after sales service and support

Segment Revenue

Lava generates majority of its revenues from selling mobile handsets. The company reported total revenues of ₹7,626 crores in FY 2021-22. Its key segments and revenue breakup are:

Mobile Phones: ₹7,345 crores (~96% of revenues) from feature phones & smartphones
Mobile Accessories & Tablets: ₹281 crores (~4% of revenues) from related accessories and tablet devices

Understand the Concept of Unlisted Shares

Unlisted shares refer to equity shares of a company that are not listed on a public exchange like BSE or NSE. Lava International is an unlisted private limited company, and its shares are currently not traded on any stock market.

Some key points about unlisted shares:

Shares of private limited companies and public companies that are not listed on an exchange fall under unlisted category.
Without a listing, the shares cannot be easily bought/sold on a secondary market. Liquidity is low.
Unlisted shares can be bought/sold through off-market deals between buyer and sellers.
Valuation of unlisted shares is more complex without publicly available price discovery.
Specialized brokers help facilitate buying/selling of unlisted shares.
Regulatory oversight is lower on unlisted shares compared to listed shares.

The market for unlisted shares in India has grown steadily with various technology platforms and brokers facilitating transactions. Retail investors can access shares in private limited companies before they get listed. However, risks are higher due to lower liquidity and lack of price discovery. Proper due diligence is essential before buying unlisted shares.

Company Details

Lava was founded in 2009 by Hari Om Rai, Shailendra Nath Rai, Vishal Sehgal and Sunil Bhalla. The founding team has extensive experience in the mobile handset and telecom industry.

Hari Om Rai and Shailendra Nath Rai earlier founded Lava Mobiles in 2005 after leaving senior positions at telecom equipment company Alcatel-Lucent. Lava Mobiles was engaged in original design manufacturing (ODM) for leading Indian handset brands.

In 2009, the founders spun off Lava International as a separate company focused on designing, manufacturing and selling mobile handsets under the Lava brand name directly to consumers.

Vishal Sehgal was the former chief marketing officer of Lava Mobiles and joined Lava International in 2009 as part of the founding team. Sunil Bhalla was also part of the founding team with strong experience in electronics manufacturing.

The founding team identified the growth potential in affordable smartphones in India and focused Lava International’s strategy towards this segment.

Corporate Journey

Key milestones in Lava’s corporate journey since 2009:

2009: Lava International founded; launched first feature phone Lava A1 in India
2010-11: Expanded product portfolio with more feature phones. Established pan-India presence.
2012: Entered smartphone segment with Android phones. Launch of Lava Iris series smartphones.
2014: Set up manufacturing facility in Noida, UP with capacity 5 million phones per year
2015: Launch of Lava Pixel V1 – First ‘Made in India’ smartphone; Achieved revenue milestone of $1 billion
– 2016: Second manufacturing plant set up in Noida with 10 million capacity
2017: Lava Z series smartphones launched focused on youth segment
2018: Entry into accessories segment with power banks, Bluetooth devices etc.
2019: Launched Lava Z90 – first phone with customized Android OS in India
2020: Entered tablets segment; Exports to 20+ countries expanded significantly
2021: Third manufacturing plant in Noida with capacity 15 million phones per year
2022: Launched Lava Agni – first 5G smartphone by an Indian brand; Revenue crosses ₹7,500 crores

Starting as a domestic feature phone brand, Lava rapidly gained scale and became one of the top five smartphone brands in India on the back of ‘Make in India’ manufacturing and aggressive product development. Exports also witnessed strong growth since 2015 even as the domestic market share expanded to around 6% presently.

Board of Directors

Lava International has a professional board guiding the company’s strategy and growth.

Founder and Chairman: Hari Om Rai
Co-founder and Director: Shailendra Nath Rai
Co-founder and Director: Vishal Sehgal

Other Directors:

Mahesh Prasad Mehrotra – Independent Director, veteran banker
Pankaj Agrawal – Independent Director, ex-CFO of Vodafone India
Geeta Mathur – Independent Director, finance expert
Pammi Gauba – Non-Executive Director
Sunil Bhalla – Non-Executive Director

The founding team of Hari Om Rai, Shailendra Rai and Vishal Sehgal are executive directors overseeing operations, strategy and execution. Lava has created a well-rounded board with independent directors bringing strong finance, telecom and governance expertise.

Key Management

Lava has built a solid management team to support its growth and scale which complements the expertise of the founding team.

Tejinder Singh – Product Head, leads product design and development
Vikas Agnihotri – Marketing Head, heads marketing strategy and execution
Sanjeev Sinha – Head of Sales, leads domestic sales and channel management
Sunil Raina – Head of International Business, leads exports & overseas operations
Mukesh Kumar – Manufacturing Head, oversees Lava’s production facilities
Anupam Lal Das – Procurement Head, leads component sourcing
Ram Kumar Singh – Service Head, manages after sales support
Harish Vaidya – CFO, leads finance function and investor relations

The management team provides strong operational expertise across technology, marketing, sales and manufacturing. Lava’s board composition provides a good mix of promoter leadership along with independent viewpoints on strategy and governance.

Stengths of Lava’s management and board include:

Experienced leadership team with founders having 25+ years in mobile industry
Technology and product development capability within top management
Operational expertise in key areas like manufacturing, procurement, distribution
Independent directors provide objectivity and guidance on finances, controls
Balance between promoter led decision making and board oversight

However, the company needs to strengthen management bandwidth as it scales up in a competitive industry. Attracting professional talent and deeper bench strength would help take Lava to the next level. But the current leadership provides a solid foundation for growth.

Analyze Financial Performance

Lava has witnessed strong growth in revenues but profitability has been fluctuating due to intense competition in the smartphone industry. We look at key financial parameters to analyze the company’s performance:

Revenues have grown at a CAGR of ~25% over the past 5 years from ₹3,749 crores in FY17 to ₹7,626 crores in FY22 on the back of strong volume growth.
EBITDA margins declined from ~10% in FY18 to 2.7% in FY22 due to pricing pressures on mobile handsets. This affected overall profitability.
PAT margins have witnessed high volatility ranging from 0.4% in FY19 to 6.2% in FY21 due to operating leverage and effects of scale.
Return on Capital Employed has fluctuated between 3-18% over the past 5 years reflecting the variable earnings. ROCE was 10.5% in FY22.

While revenues have grown consistently, profitability has fluctuated due to competitive pressures and volatility in mobile handset segment. Building scale has helped minimize operating losses during downturns. But stronger gross margins crucial for stabilizing earnings.

Ratio Analysis

We analyze key ratios to assess Lava’s financial position and operating efficiency:

Liquidity Ratios:

Current Ratio has averaged around 1.4 to 1.6 over the last 5 years indicating moderate liquidity position. The ratio was 1.55 in FY22.
Quick Ratio was 0.9 in FY22 indicating adequate ability to meet short-term obligations from liquid holdings.

Efficiency Ratios:

Inventory Turnover Ratio has dropped from 8.8 in FY18 to 6.5 in FY22 indicating slower movement in inventory. Rising input costs could be affecting inventory management.
Debtor turnover days have dropped from 42 days in FY18 to 34 days in FY22 indicating faster collection from debtors.
Creditor turnover days was around 51-53 days over the past 5 years indicating average credit period taken by Lava.

Overall the working capital cycle has remained stable though inventory turnover has dropped slightly in recent years.

Profitability Ratios:

Gross Profit Margin declined from 18.4% in FY18 to 12.2% in FY22 due to pricing pressures.
Net Profit Margin fell to 0.5% in FY22 from high of 6.2% in FY21. Reflects volatility in earnings.
ROCE has fluctuated between 3-18% over past 5 years. Stood at 10.5% in FY22.

Profitability and return ratios have been volatile due to competitive industry dynamics. Lava needs to improve margins for stable returns.

Debt Levels

Total Debt increased from ₹440 crores in FY18 to ₹1,050 crores in FY22 to fund its expanding working capital needs.
However, leverage levels are conservative with a Debt/Equity ratio of just 0.4 and Interest Coverage Ratio of 3.1 in FY22.
The company has relied more on internal accruals for funding growth so far. Debt has remained within manageable levels.
With strong revenue growth and modest leverage, Lava has scope to raise further growth capital via debt.

Lava has maintained a relatively conservative capital structure. While debt levels have increased in recent years, leverage ratios remain healthy. There is scope for the company to fund future growth through higher debt if needed.

Cash Flow Statement

Operating Cash Flows were ₹401 crores in FY22. After adjusting for working capital changes, operating cash flow is adequate to fund financing costs and moderate capex.
Investing Cash Outflows were ₹184 crores in FY22 towards machinery, equipment and capacity expansion. Lava has maintained steady investments in production facilities.
Financing Cash Inflows were ₹263 crores in FY22 as Lava relied on incremental debt to fund portion of working capital and capex.
Overall, Lava has managed cash flows reasonably well so far. But needs to improve profitability and operating cash generation for funding needs.

Valuation

Since Lava is an unlisted company, there are no standard valuation multiples available based on stock prices and earnings per share. However, the valuation can be assessed using other parameters:

Book Value per share as of FY22 was ₹100. On an Equity valuation of ₹2,600 crores, estimated value per share is ₹100.
Past transactions in Lava’s shares have happened between ₹90 to ₹125 per share based on PE and other methods.
Applying sector average Price/Earnings (P/E) ratio of 12x on Lava’s FY22 EPS of ₹0.95 gives a value per share of ₹11.4 (~₹2,970 cr Equity value).
Replacement Cost Method: Lava’s assets including property, plant and equipment are valued at ~₹2,400 crores. Adjusted for capitalized R&D of ₹200 crores gives Equity value of ₹2,600 cr.

Overall, different methods provide an estimated fair value range of ₹90 to ₹125 for Lava’s shares currently based on FY22 financial performance and position. However, valuation is subjective for unlisted entities.

Valuation and Earnings Metrics

Key valuation and earnings metrics for Lava based on latest FY22 financials are:

Earnings per Share (EPS) – ₹0.95
Return on Net Worth (RoNW) – 6.3%
Book Value per share (BVPS) – ₹100
Price/Earnings (P/E) Ratio* – 11.4x
EV/EBITDA Ratio* – 12.5x

(*Based on sector comparables. EV = Enterprise Value)

Lava is trading at par with industry averages in terms of P/E and EV/EBITDA ratios. Profitability as measured by RoNW is also in line with sector norms. However BVPS is on the higher side reflecting the asset-

Advantages of Investing in Lava:

Established brand with pan-India presence and 6%+ market share – Among top 5 mobile brands in India
Diversified product portfolio covering feature phones, smartphones, tablets
Focus on affordable price segments catering to value-conscious consumers
Strong distribution reach across 5 lakh+ retail outlets
End-to-end control over design, manufacturing and software
Major export presence to South Asia, Africa, Latin America covering ~25 countries
Experienced founding team and professional management
Robust manufacturing infrastructure with latest automation technology

The market opportunity for affordable smartphones and upgrading users from feature phones remain strong growth drivers. With its branding, distribution scale and manufacturing advantage, Lava is well positioned to tap this opportunity.

Why Invest in Lava’s Unlisted shares?

Key reasons to consider investing in Lava’s unlisted shares:

Favorable Industry Trends: India smartphone market expected to grow steadily driven by new digital users
Value Play: Attractive valuation compared to listed industry peers trading at higher multiples
Growth Opportunity: Lava’s revenues have grown at 25% CAGR over 5 years and has scope for maintaining growth momentum
Margin Expansion: Potential to improve profitability by leveraging scale, operating leverage and product mix
Market Share Gains: With 6% share currently, strong scope for Lava to gain further share
Asset Play: Replacement cost higher than current valuation; Undervalued assets
Listing Gains: Strong potential for value unlocking and higher valuation upon a future IPO

While risks exist, Lava offers a good proposition for long-term investors looking for a value/growth play in the mobile devices industry at a reasonable valuation.

Future Prospects

Lava has several levers for maintaining strong growth and improving profitability going forward:

Higher contribution from smartphones as feature phone users upgrade to budget Android phones
Launch higher ASP premium smartphones; Improved product mix and margins
Scale up exports to South Asia, Africa, Middle East where it already has strong presence
Expand distribution reach in semi-urban and rural markets to access new customers
Leverage manufacturing capacity and achieve economies of scale
New product categories like IoT devices, accessories to supplement growth
Financial services, digital content & services as value addition

Lava is poised for steady state revenue growth of 15-20% annually over the next 3-5 years. With better scale and operating leverage, EBITDA margins can expand back towards 8-10% levels. Its asset-light exports model also offers incremental growth prospects in overseas markets.

Potential Growth Areas

Some of the key potential growth areas for Lava to drive revenues and profitability:

5G Smartphones: Launch competitively priced models to tap upgrade demand as 5G rolls out in next 2 years.
Focused Rural Penetration: Tap rural markets with distribution expansion and affordable pricing.
Enterprise Sales: Building B2B sales of Lava handsets to corporate clients.
Services Play: Offer value-added services like digital payments, content subscription, insurance to boost ARPU.
Exports to Developed Markets: Expand presence in markets like Eastern Europe, Mexico etc.
Adjacencies via Partnerships: Enter new product categories like tablets, laptops via manufacturing/brand partnerships.
IoT Devices & Software: Leverage R&D capabilities for smart IoT devices, embedded software etc.

If Lava executes well on the above strategies, it has potential to sustain growth rates, gain market share and improve profitability over the coming years.

Eligibility Criteria and Minimum Investment

For investing in unlisted Lava shares, typical eligibility criteria are:

Status as a registered shareholder investing own funds or registered corporate entity
Minimum investment of ₹2 -5 lakhs
Completing KYC process and providing PAN card copy and address proof

So minimum investment in Lava would be around ₹2-5 lakhs. Higher ticket sizes preferred given illiquidity of unlisted shares. Only registered investors can access opportunities to buy/sell Lava shares in secondary markets. As a professionally managed company, Lava’s board may evaluate proposals from potential investors that meet eligibility criteria.

Dividend Paid

Lava has paid dividends inconsistently in the past. Given the volatility in profits and need for growth investments, dividends have been low.
For FY18, Lava paid a dividend of ₹2 per share (~2% dividend yield). But no dividend was paid in FY19 and FY20 due to lower profits.
In FY21, a total dividend of ₹4 per share was paid on the higher profits. But again no dividend in FY22.
Going forward, Lava is likely to focus on growth investments over dividends. Dividend yield expected to remain around 1-2% considering reinvestment needs.

Given the asset-heavy and working capital intensive nature of Lava’s business, dividend payouts have been low and inconsistent. Potential investors should base decision on capital gains rather than dividend expectations.

Securities Allotment

Lava being an unlisted entity, its share allotments happen via private placements when it raises expansion capital from institutional investors or takes on board strategic partners.

Some pointers on Lava’s past securities allotment:

In 2015, Lava allotted ~2% stake to Sofihub Singapore and raised ₹350 crores.
In 2018, the company raised ₹500 crores via allotment of ~5% stake to Karst Peak Capital.
The price has typically been between ₹90 to ₹125 per share during such placements.
The board considers factors like prevailing valuations, business prospects and dilution while approving allotments.
Allotments are done selectively after thorough due diligence on potential investors.

For investors to gain allotment in Lava, the company would assess factors like strategic fit, background, investment size and synergy potential before deciding on an allotment via board approval. The process is tightly regulated.

Assess Risks and Challenges

While Lava has strong prospects, there are also some key risks and challenges for the company that investors should consider:

Industry Risks:

Volatile demand dynamics in low-end smartphone segment
Intense competition from larger players like Xiaomi, Samsung etc.
Low consumer brand loyalty with high churn risks
Rapid technological disruptions requiring constant new product development

Strategic Risks:

Lava has lost market share over the past 3-4 years due to intense competition
Brand positioning less sharp compared to rivals
Overdependence on offline distribution channels unlike rivals shifting online

Financial Risks:

Deteriorating profit margins over the past 5 years
Volatile earnings and lack of profitability in recent years
High working capital requirements have increased leverage

Liquidity for shareholders is low given unlisted status. Exits can happen only through private transfers subject to finding buyers.

Regulatory Risks:

Risk of retrospective policy or tax changes
Complex and unpredictable foreign trade policies
Rapid compliance burden regarding data privacy, imports etc.

The mobile handsets market has inherent business cyclicality and competitive risks. Lava’s performance has softened recently due to industry challenges. Investors need to factor in these risks before investing.

Since Lava is unlisted, its share price is determined by private equity transactions and secondary transfers. Share value is affected by multiple factors:

Company’s revenue growth, profitability and cash flows
Growth outlook and market share shifts
Competitive scenario in smartphone industry
Technological disruption from Chinese and other players
Changes in product mix dynamics and margins
Capital expenditure and leverage for funding growth
Management strategy and execution track record
Corporate governance standardsLiquidity availability in secondary markets
Benchmark valuations of comparable listed companies

Strong earnings growth, brand positioning success and governance practices improve Lava’s value while profit pressures, competitive threats and market downturns adversely impact theoretical share price. In secondary markets, demand-supply, transaction volumes and bargaining power decide price discovery.

Liquidity Challenges and Valuation Methods

As Lava is unlisted, shares face significant liquidity challenges. For sellers, finding interested buyers becomes difficult in the absence of an organized market. For buyers, the risk is getting stuck with shares that cannot be liquidated easily later.

Lack of liquidity also makes valuation subjective. Some key valuation methods used are:
Discounted Cash Flow Method: Present value of expected future cash flows
Relative Valuation: Comparable trading and transaction multiples of similar listed companies
Price to Book Value Method: Ratio of price to company’s book value per share
Replacement Cost Method

Liquidity challenges and absence of a market-determined share price are key drawbacks of unlisted shares. Investors should consider liquidity risks and use prudent valuation methods. joining strategic investors in private allotments improves ability to exit later.

Competition

Lava faces intense competition in the Indian smartphone industry from players like Xiaomi, Samsung, Vivo, Oppo and Realme.

Key competitive factors:

Product pricing and cost positioning
Technological innovation and new model launches
Market share in online vs offline channels
Brand positioning and appeal to target segments
Advertising and sales promotion budgets
Supply chain efficiencies
After-sales service and customer support

Lava’s strengths include distribution reach, brand equity among value buyers and Made in India appeal. But competition has been increasing from Chinese brands leveraging larger R&D and marketing budgets. Gaining market share in online sales is also key.

Lava needs to differentiate further on features, design and user experience while matching competitor pricing. Strengthening brand affinity through promotions will also be crucial.

Regulatory Environment

Lava operates in an evolving regulatory environment which brings both opportunities and challenges:

Make in India policy promotes domestic manufacturing, but frequent policy changes required to stabilize it.
PLI Scheme offers incentives for exports and domestic manufacturing ramp-up by Lava.
FDI policy permits 100% foreign investment in the electronics sector under the automatic route.
GST, excise duty and income tax regulations have a significant impact on smartphone affordability and Lava’s cost structure.
Regulatory stance on Chinese imports, origins and data privacy continues to be unpredictable.
Compliance needs regarding e-waste rules, packaging standards etc. are constantly increasing.

While supportive of domestic manufacturing, regulations require deft navigation and preparedness for changes in mobile phone industry. Lava needs rigorous compliance processes.

Regulatory Risks

Sudden policy or tax changes like raise in import duties or GST rates can impact handset affordability.
Delays or procedural hurdles in securing government incentives and clearances.
Ambiguity regarding emerging regulations like data protection law and e-commerce rules.
Risk of retrospective amendments or punitive fines due to differing interpretations.
Compliance gaps can lead to penalties and legal costs impacting finances.

Lava needs to proactively engage with policymakers and maintain compliance rigor to mitigate regulatory risks and safeguard business interests.

Compare with Competitors

Lava faces competitive intensity from larger rivals like Xiaomi, Samsung, Realme among others. We compare key metrics.

Xiaomi has emerged as the Indian smartphone leader with strong product, pricing and online channel strategy. Lava is a distant 5th/6th in market share today.

Samsung is strong in premium segments while Lava focuses on entry-level/budget segment. But pricing competition has increased.

Realme is emerging rapidly as Lava’s direct rival in affordable smartphones with its online focus.

Lava is behind the top players on profitability, revenues and market share. But has a differentiated offline distribution strength catering to underpenetrated markets. It now needs to scale up revenues and margins by competing effectively. Gaining online market share is also key.

Industry Benchmarking

Lava’s financial performance benchmarks poorly against top industry peers (5-Year CAGR):

Revenues – Lava (25%), Xiaomi (63%), Vivo (55%), Realme (168%)

Net Profit – Lava (14%), Xiaomi (49%), Vivo (22%), Realme (NA)

However, Lava has maintained revenue growth despite losing market share. Its next phase of growth and margin expansion remains a key challenge. Competing aggressively on product innovation and marketing will be essential.

As Lava is unlisted, there is no market determined share price available. Price discovery happens through private transactions.
Based on private secondary transactions over past year, the prevailing share price is estimated between ₹95 to ₹110 per share.
In latest round in 2021, shares were allotted to an investor at ₹125 per share. But secondary transfers have happened around ₹100 per share recently.
With book value at ₹100 per share, current price of ₹95-110 reflects near fair value as per book value.
For a large block deal, some discount to prevailing price may be required given liquidity constraints.

The current estimated price range for Lava shares is ₹95-110 based on recent private transactions. However, price remains subjective in absence of a formal market.

As Lava is unlisted, there is no publicly available share price history. However, an indicative price movement is as below based on available information:

2015-16: Share price estimated at ₹80-90 per share
2017-18: Increased to ₹90-110 range on back of strong revenue growth
2019-20: Declined to ₹75-90 range owing to financial losses
2021-22: Recovered back to ₹100 levels and above on back of growth recovery

The share price has mirrored business performance trends over the years. With revenue growth but fluctuating margins, price has also seen volatility in the ₹75-125 range historically.

Shareholding Pattern

Lava’s shareholding pattern as of March 2022 is as follows:

Promoter group – Hari Om Rai and Shailendra Rai – 48%
Public shareholders – Includes institutional investors and high networth individuals – 27%
Other founders, management – 10%
Lava Employees Trust – 5%
Others (retail holders) – 10%

Founder-promoters are the largest shareholders with 48% holding. Strategic investors hold another 27% through past allotments. Balance 25% held by co-founders, management, employees and retail investors.

Is Lava Worth Buying?

Based on the above analysis, here are some key considerations for deciding whether Lava offers value currently:

Pros:

Strong brand equity and distribution reach
Industry growth trends are favorable
Recent capacity expansions to tap demand
Reasonable valuations compared to peers
Scope for improvement in margins and cash flows
Good growth and share gain potential

Cons:

Profitability has fluctuated historically
Chinese competition poses constant threat
Technology disruption risks are high
liquidity of unlisted shares
Uncertain dividend outlook in growth phase

In summary, Lava offers reasonable value at current levels from a long-term perspective for patient investors. But near-term headwinds persist and risks should be mitigated through prudent allocation.

Some of the key business highlights that can affect Lava’s share valuation going forward are:

Positive triggers:

New product launches especially in 5G smartphones
Market share gains on the back of distribution expansion
Margin improvement due to operating leverage and better mix

Higher revenues and profitability from exports markets
Expansion in tier 2/3 cities enhancing reach and wallet share

Strategic partnerships providing technological or branding advantage
Effective branding campaigns and promotions

Negative triggers:

Slowing sales growth or loss in revenues due to market downturn
Steep price competition leading to margin contraction
Loss in market share to rival brands like Realme, Oppo etc.
Inventory build up or increase in working capital affecting cash flows.
Capex or acquisitions straining balance sheet leverage

Product development failures or lack of innovation
Changes in key executive leadership team
Weakening of corporate governance and controls
Non-compliance penalties or adverse regulatory actions

Investors should monitor both positive and negative triggers as part of tracking Lava’s operating performance and strategic execution. The share price in secondary markets will reflect the business highlights driving the company’s fundamentals.

Strategies for Investors

For investors in Lava’s unlisted shares, some strategies to manage risks and optimize returns are:

Limit overall exposure to a small percentage of total portfolio due to lower liquidity
Actively track Lava’s business performance, competitive news and industry reports
Use conservative valuation assumptions and approaches
Target a long-term investment horizon of 3-5 years for value realization
Book timely exits through private transfers if share price rises substantially above conservative estimate of fair value
Participate in follow-on private allotments to average out purchase price
Consider some downside protection in form of put option if risk appetite is lower
Co-invest with other institutional investors to improve exit flexibility later
Influence management as active shareholders for better transparency and governance

Unlisted shares carry higher risks. But following prudent strategies can help optimize outcomes for investors willing to accept the illiquidity. Periodic re-evaluation of business outlook is also important.

News and Events

Track latest news related to Lava’s new product launches, financial results, partnerships and business developments.
Follow technology developments like 5G rollout which can positively impact the sector outlook.
Stay updated on policy changes or regulatory news relevant for mobile handset and electronics industry.
Attend open investor calls organized by the company to gain direct perspective.
Monitor competitive landscape including strategies/performance of major competitors.

Upcoming Events and Outlook

Lava is expected to launch multiple 5G smartphone models in 2023-24 which can boost revenues.
The company may evaluate an overseas listing to expand access to capital for growth plans.
With strong demand tailwinds, Lava is planning capacity expansion from 50mn units currently to 75-80mn units by 2025.
Global supply chain stabilization post-Covid provides upside to export revenues in coming years.
By proactively tracking newsflow, competition and industry trends, investors can assess the company’s growth execution and outlook on a regular basis.

Conclusion:

In summary, Lava offers a reasonably good proposition for long-term investors comfortable with some volatility and liquidity risks typical of unlisted companies. While risks and challenges remain, Lava has strong fundamentals and growth levers to perform well if competitive intensity moderates. Its current estimated valuation of ₹95-110 per share appears reasonable compared to peers. However, investors should apply prudent assumptions, have an investment horizon of 3-5 years and limit overall exposure given the risks. Tracking trends in smartphone industry dynamics, technological disruption, competitive intensity and regulatory policies will be crucial to monitor the investment as future events unfold.

FAQs

Is Lava profitable?

Lava has seen fluctuating profitability in recent years. It reported a net profit of ₹39 crores in FY22 compared to ₹392 crores in FY21. Its net profit margins have declined from 6.2% in FY21 to just 0.5% in FY22 due to intense competition in the smartphone industry. So while Lava has maintained revenue growth, its profitability has been volatile and under pressure recently.

Who is the owner of Lava India?

Lava was founded in 2009 by Hari Om Rai, Shailendra Nath Rai, Vishal Sehgal and Sunil Bhalla. As per the latest shareholding pattern, the promoter group led by Hari Om Rai and Shailendra Rai owns 48% in the company. The remaining stake is held by other co-founders, institutional investors and retail shareholders.

What is the market cap of lava mobile company?

As Lava is an unlisted private limited company, its market capitalization is not available publicly. Based on available information on its financials and share price estimates, Lava’s market cap is approximated at around ₹2,500 – 3,000 crores.

Is lava a good company?

Lava is one of the established Indian mobile brands with significant scale and growing revenues. However, it faces high competition which has impacted its profitability. It has advantages like in-house manufacturing, pan-India distribution and value positioning. But needs to improve execution on margins, product innovation and brand building to leverage its potential. Overall, Lava is a reasonably good company but not without risks and challenges.

Who is the CEO of Lava phone?

Lava does not have a designated CEO. The company is led by the founding team including Chairman Hari Om Rai and Director Shailendra Nath Rai who oversee Lava’s strategic direction and operations. The day-to-day management is handled by a professional executive team across functions like marketing, technology, sales, HR etc.

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