Lakshmi Machine Works hosted a conference call on Oct 27, 2023. In the conference call the company was represented by V Senthil, CFO.

Key takeaways of the call

Current TMD (textile machinery division) domestic order book is healthy at Rs 4300 crore and of which Rs 3300 crore is active orders book.  The exports order book is about Rs 440 crore largely in the books of its LMW MiddleEast. 

H1FY24 revenue mix is 75% domestic, 11% Exports and 14% is spares. 

Of the MTFD (Machine Tools & Foundry Division) revenue about 10% is from foundry and balance 90% are from Machine Tools (MT). 

ATC (advance technology centre) – Strong growth in revenue of ATC for H1FY24 was largely due to lot of pull and strong order book.  The company was investing the two business components of ATC i.e.   metallics and one is composite business. The company has invested about Rs 120-150 crore so far in both metallics and composites together. 

ATC’s Metallics business is now stabilized and is largely focused towards aircraft parts and the order books are of long term in nature typically 5 years.   Last one and half years there is strong execution as there was last fully.  Order book of Metallics is currently close to Rs 300 order crore, which will be executed over 4-5 years. The growth will continue going forward as there is pull and will continue till the pull lasts.   

ATC’s Composite business: The company has invested in composite in last four years.  The composite business is largely dependent on government programmes and the current order book is largely made of government orders.    Capacity utilization of composites is not close to breakeven levels.  The margin typically is 15-18% on full complete capacity utilization.  

Textile Capex is currently facing challenging times and it is on slowdown/subdued in last one year.   When the recovery will start or fresh order flow will kick start at global level is currently uncertain. The cotton price in last 6 weeks is stable, but geopolitical and other headwinds are there. 

The current TMD order book is OK. And if the company could add more to the order book that will be good.   The new products and efficient machines will help in this case.

MT – The blended average price of machines will be Rs 22 lakh. Machining centres are lot more expensive than turning centres. Not make any special purpose machines. The company makes lot of buyouts especially precision and electronic components in the manufacture of MT. Once commercialization of machines that are under testing happens the margin will improve.

Current capacity of MT is for the STO of RS 1200 crore and the company is also investing in additional space with new building. By end of current fiscal new capacity will be commissioned and will result in additional 20% growth in STO of MT.

MT – Previously (pre covid) the company largely into TC machines and now introducing more of MC machines. The margin of MC (constitutes 20% of revenue) machines are relatively lower. So the margin of MT depends on mix between MC and TC.  The under capacity utilization is also one of drag on margin.

Imported component in TMD is 20% largely metallics, electrical and electronics.

Post Covid has taken two price rise in case of TM that is close to about 20%. 

Textile PLIs are there for end garmenting aimed to push exports of the country. However the range of machines the company has are largely spinning as the machine range basked of it is not beyond winder.

LMW MiddleEast revenue in H1FY24 was Rs 148 crore compared to Rs 9 crore as for the full last year the company was not operational. But now it become operational generating revenue. 

LMW China order book is about Rs 22 crore and the company with resumption in air travelling will start improving the business growth.