LMW diversified into CNC Machine Tools and is a brand leader in manufacturing customised products.

LMW Foundry makes Precision Castings for industries world over.

LMW has also added the Advanced Technology Centre to produce components for Aerospace Industry.

Quarter results

For the quarter ended June 2019, it registered a 29% fall in sales to Rs 452.32 crore. OPM fell 630 basis points to 2.7% which saw OP fall 79% to Rs 12.013 crore.

Other income fell 35% to Rs 21.21 crore and interest cost went up 25% to Rs 21 lakh. As depreciation fell 10% to Rs 12.33 crore, PBT went down 73% to Rs 20.68 crore.

EO loss was NIL against Rs 3.60 crore. Thus PBT after EO fell 71% to Rs 20.68 crore. Tax fell 70% to Rs 6.62 crore, after which PAT went down 72% to Rs 14.06 crore.

FY 2019 results

In FY 2019, it registered 3% rise in sales to Rs 2635.90 crore. OPM fell 20 basis points to 10.2% which saw OP rise 1% to Rs 268.42 crore.

Other income fell 2% to Rs 106.09 crore and interest cost jumped 50% to Rs 99 lakh. As depreciation fell 30% to Rs 49.83 crore, PBT grew 7% to Rs 323.67 crore.

EO loss due to VRS was Rs 37.17 crore against Rs 4.03 crore. Thus PBT after EO fell 7% to Rs 323.67 crore. Exceptional items represents compensation towards Voluntary Retirement Scheme opted for by employees.

Tax grew 11% to Rs 97.22 crore, after which PAT went down 10% to Rs 189.28 crore.

Segment results

Estimates of lower cotton production in the current year and as a result higher cotton prices has depressed demand for spinning machinery. Severe slowdown in automobile sector has adversely affected machine tools segment. 

During the quarter sales from Textile Machinery Division fell 27% to Rs 347.55 crore and accounted for 74% of sales. PBIT fell 85% to Rs 4.97 crore and accounted for 40% of total.

In FY 2019 sales from Textile Machinery Division fell 6% to Rs 1916.28 crore and accounted for 70% of sales. PBIT fell 9% to Rs 151.80 crore and accounted for 62% of total.

Performance of the company is closely related to the prospects of textile spinning mills. Governments in India has supported by attractive fiscal policies to boost the setting up of Greenfield Projects. Presence of an ever growing fashion conscious population compels the textile mills to upgrade their production facilities continuously. This is an opportunity for the company as continuous upgradation of manufacturing technology and the ability to provide the complete range of contemporary textile machinery at a competitive price makes the company a natural partner of choice.

The company is strengthening its presence in overseas markets where textile industry is active. This is expected to boost company's earnings potential in the near future. In depth experience gained by the company over the years, along with a committed work force with specialised skill sets would enable it to grab any challenging opportunity.

During the quarter sales from Machine Tool and Foundry Division fell 35% to Rs 115.87 crore and accounted for 25% of sales. PBIT fell 57% to Rs 11.99 crore and accounted for 96% of total.

In FY 2019 sales from Machine Tool and Foundry Division rose 33% to Rs 770.14 crore and accounted for 28% of sales. PBIT grew 40% to Rs 108.18 crore and accounted for 44% of total.

The machine tool industry is key to the government's flagship ‘Make in India' and ‘Skill India' initiatives, given that it makes the machines required for the manufacturing sector. As India continues to strive up the Ease of Doing Business ranking to emerge as a global manufacturing hub and focuses on localizing defense equipment manufacture, the prospects of the machine tool industry appear bright going forward.

During the quarter sales from Advanced Technology Center Division grew 15% to Rs 7.55 crore and accounted for 2% of sales. It reported a loss Rs 4.42 crore against Rs 3.51 crore at PBIT level and accounted for -35% of total.

In FY 2019 sales from Advanced Technology Center Division fell 19% to Rs 34.57 crore and accounted for 1% of sales. It reported a loss Rs 14.28 crore against a profit of Rs 39 lakh at PBIT level and accounted for -6% of total.

The division continues to focus on increasing the proportion of value-added components and subassemblies in its revenue mix. Considering the fact that growth in Aerospace and Defence Industries is an opportunity, the Company will continue to invest in technologies and capacity buildup. This holds the promise to make this division a strong contributor to the Company's business and profit growth.

Major opportunities arise from the growth in aerospace, defence, power and power transmission, infrastructure and auto ancillary industries. Also the Government's initiative to stimulate economic growth and plans to boost the share of manufacturing sector to the GDP will help.

Margins of all Segments fall during the quarter

During the quarter PBIT margins of Textile Machinery Division fell from 7.0% to 1.4%. For the year it went down from 8.2% to 7.9%.

During the quarter PBIT margins of Machine Tools and Foundry Division fell from 15.6% to 10.4%. For the year it went up marginally from 13.3% to 14.0%.

During the quarter PBIT margins of Advanced Technology Center Division fell from -53.7% to -58.6%. For the year it went down from 0.9% to -41.3%.

Consolidated results

In June 2019 quarter, it registered consolidated sales of Rs 457.78 crore. OPM stood at 1.7% which saw OP at 7.90 crore.

PBT stood at Rs 15.59 crore. PAT stood at Rs 10.47 crore.

In FY 2019, it registered 3% rise in consolidated sales to Rs 2711.77 crore. OPM rose 40 basis points to 10.8% which saw OP rise 7% to Rs 293.85 crore.

Other income fell 5% to Rs 102.43 crore and interest cost jumped from Rs 77 lakh to Rs 21.17 crore. As depreciation fell 27% to Rs 55.35 crore, PBT grew 4% to Rs 319.76 crore.

EO loss due to VRS was Rs 37.17 crore against Rs 4.03 crore. Thus PBT after EO fell 7% to Rs 282.59 crore. Tax grew 11% to Rs 97.21 crore, after which PAT went down 14% to Rs 185.38 crore.

A worldwide reputed company

LMW has been consistently at the forefront of technological advancements in textile machinery. Over a period of time, the company has gained a worldwide reputation for its state-of-the-art technology and high quality standards. LMW has a major role as a totally integrated spinning system manufacturer.

Spinning machines from LMW contributes to a large extent in keeping Indian production costs down and quality standards up.

Continuous upgradation of manufacturing technology and the ability to provide complete range of contemporary textile machinery at a competitive price makes LMW a natural partner of choice.

Valuation

The stock trades at Rs 4500.