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Lakshmi Machine Works (LMW) posted strong top-line growth of 31.2% yoy to
`581cr (`443cr) during 2QFY2012. However, the company’s OPM fell by 226bp
yoy to 15.3%, mainly due to higher raw-material cost and other expenditure. PAT
grew modestly by 7.4% yoy to `49cr. We maintain our Buy recommendation on
the stock.
Strong top-line growth with order book at `4,663cr: LMW registered strong
top-line growth of 31.2% yoy to `581cr. The textile machinery division posted
strong sales growth of 28.7% yoy to `495cr (`385cr). The others division also
grew strongly by 48.0% to `88cr (`60cr). The company’s OPM contracted by
226bp yoy to 15.3% due to higher raw-material cost. PAT margin contracted by
only 188bp yoy. PAT came in at `49cr, up 7.4% yoy. The company recorded a
decline in its order inflow during the quarter, reflecting the current scenario of
the textile industry. LMW’s order book now stands at `4,663cr vs. `4,800 in
1QFY2012, while total order inflow at 2QFY2012-end stood at ~`180cr.
Outlook and valuation: We remain positive on the company’s outlook, given a
strong order book of `4,663cr. Although yarn prices have shown signs of
correction in the recent past, overall demand, as reflected in the order inflow, is
still robust. Spinning mills continue to operate at high utilization levels. At the
CMP, the stock is trading at 11.0x and 8.2x its FY2012E and FY2013E EPS,
respectively, which we believe is attractive. We maintain our Buy
recommendation on the stock with a target price of `2,780.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Lakshmi Machine Works (LMW) posted strong top-line growth of 31.2% yoy to
`581cr (`443cr) during 2QFY2012. However, the company’s OPM fell by 226bp
yoy to 15.3%, mainly due to higher raw-material cost and other expenditure. PAT
grew modestly by 7.4% yoy to `49cr. We maintain our Buy recommendation on
the stock.
Strong top-line growth with order book at `4,663cr: LMW registered strong
top-line growth of 31.2% yoy to `581cr. The textile machinery division posted
strong sales growth of 28.7% yoy to `495cr (`385cr). The others division also
grew strongly by 48.0% to `88cr (`60cr). The company’s OPM contracted by
226bp yoy to 15.3% due to higher raw-material cost. PAT margin contracted by
only 188bp yoy. PAT came in at `49cr, up 7.4% yoy. The company recorded a
decline in its order inflow during the quarter, reflecting the current scenario of
the textile industry. LMW’s order book now stands at `4,663cr vs. `4,800 in
1QFY2012, while total order inflow at 2QFY2012-end stood at ~`180cr.
Outlook and valuation: We remain positive on the company’s outlook, given a
strong order book of `4,663cr. Although yarn prices have shown signs of
correction in the recent past, overall demand, as reflected in the order inflow, is
still robust. Spinning mills continue to operate at high utilization levels. At the
CMP, the stock is trading at 11.0x and 8.2x its FY2012E and FY2013E EPS,
respectively, which we believe is attractive. We maintain our Buy
recommendation on the stock with a target price of `2,780.
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