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.

September 2014 quarter results

For the quarter ended September 2014, it registered 5% rise in sales to Rs 569.09 crore.

OPM fell from 14.0% to 13.6% which slowed OP growth to 2% to Rs 77.17 crore.

Other income went down 1% to Rs 26.27 crore.

As Interest cost fell from Rs 27 lakh to Rs 25 lakh and depreciation fell 8% to Rs 23.30 crore, PBT grew 4% to Rs 79.90 crore.

EO due to VRS was Rs 6.58 crore against Rs 29 lakh. Thus PBT after EO fell 4% to Rs 73.32 crore.

Tax grew 9% to Rs 26.47 crore after which PAT went up 10% to Rs 56.84 crore.

Six months results

For the six months ended September 2014, it registered a good 19% rise in sales to Rs 1122.17 crore.

OPM fell from 12.9% to 12.8% which saw OP growing 18% to Rs 143.23 crore.

Other income went up 7% to Rs 53.18 crore.

As Interest cost grew 11% to Rs 36 lakh and depreciation fell 4% to Rs 47.47 crore, PBT grew 23% to Rs 148.58 crore.

Additional depreciation for the half year of Rs 53.34 lakh was recognised due to change in depreciation policy as required by the provision of schedule II of the companies Act 2013.

EO due to VRS loss grew 18% to Rs 7.48 crore. Thus PBT after EO grew 23% to Rs 141.10 crore.

Tax grew 22% to Rs 45.69 crore after which PAT went up 23% to Rs 95.41 crore.

Segment results

During the quarter sales from Textile Machinery Division grew 1% to Rs 518.26 crore and accounted for 87% of sales. PBIT fell 16% to Rs 50.86 crore and accounted for 92% of total.

For the six months, sales grew 17% to Rs 1044.94 crore and accounted for 89% of total. PBIT grew 19% to Rs 102.05 crore and accounted for 97% of total.

During the quarter sales from Machine Tool and Foundry Division grew 33% to Rs 75.85 crore and accounted for 13% of sales. PBIT jumped 378% to Rs 8.21 crore and accounted for 15% of total.

For the six months, sales grew 25% to Rs 127.42 crore and accounted for 11% of total. PBIT jumped 385% to Rs 11.32 crore and accounted for 11% of total.

During the quarter PBIT margins of the Textile Machinery Division fell from 11.7% to 9.8% while that of Machine Tool and Foundry Division grew from 3.0% to 10.8%.

For the six months PBIT margins of the Textile Machinery Division improved from 9.6 to 9.8% while that of Machine Tool and Foundry Division grew from 2.3% to 8.9%.

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.

Increase in demand for textile machinery

Increase in demand for textile machinery in domestic and international markets, stability in commodity prices, favourable foreign exchange rates and other input costs have contributed to the increased turnover and profits respectively.

After minimal growth during the previous year, FY 2013-14 saw demand increase for Indian textile products from traditional markets abroad and for high quality Indian yarn from China. During the same period increased domestic consumption of textile products within India was also seen. All of these factors have revived the fortunes of the Indian textile and apparel industry during 2013-14.

India's globalising textile trade has now exposed the industry to competition wherein manufacturers have to ensure quality and also be cost competitive in the final product that they deliver to the end user. This has made the Indian textile industry to embrace technology and modernize. The drive towards modernization has also invariably helped Indian spinners to develop capacities that are agile to varying market demands.

On the other hand, proactive government initiatives to boost the textile sector like extension of TUFS during the 12th Five Year Plan Period (2012-2017), initiatives to optimise the operational costs of textile industry, rationalization of taxes on textile products, allocation of funds for setting up of 21 additional integrated textile parks, etc., have led to the onset of a right kind of atmosphere needed for the industry to modernise rapidly.

Globally the demand for niche textile products like functional clothing is picking up rapidly. India is already a big player in production of conventional yarn and currently the shift is also happening rapidly towards the setting up of capacities to offer niche products. This is expected to spur further modernization and capacity building.

India's growing population has been a key driver of textile consumption growth in the country. Changing lifestyle, rising incomes and increasing demand for quality products are set to fuel the demand for apparel.

All of these developments augur well for the textile machinery division of the Company. Augmentation of internal capacity through initiatives under the Accelerated Competency for manufacturing excellence Programme (ACme) has helped this division to free up capacity, minimise waste and re-focus its efforts on core strength.

The company is also strengthening its presence in overseas markets where textile industry is active. This is expected to boost company's earnings potential in the near future.

Many factors will contribute to growth going forward

Numerous government measures like removal of excise duty on readymade garments, extension of TUF scheme to the 12th Five Year Plan period, enhanced fund allocation for textile parks and inclusion of textiles in the Focus Product Scheme would improve the financial strength of the textile sector.

Also various State Governments in India have announced attractive schemes for establishment of Textile Spinning units as green field projects.

Presence of an ever-growing fashion-conscious population compels the textile mills to upgrade their production facilities continuously. This is an opportunity for companies to upgrade the manufacturing technology and the ability to provide the complete range of contemporary textile machinery at a competitive price. This makes LMW a natural partner of choice.

India is becoming the global hub of low cost manufacturing for engineering goods. The capability of LMW to manufacture new and improved variants of the CNC machines, HMC and VMC machines will enable it to grab a sizeable market share in the years to come.

Increased investment in infrastructure, defence production and railways augur well for substantial pick up in demand for its foundry division.

Valuation

The share price trades at Rs 3900.