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Lakshmi Machine Works Limited Q1 FY 2024-2025 Earnings Call Summary
Financial Performance • Turnover Decline: Rs 636 crores in Q1 2024, down 45% from Rs 1,055 crores in Q1 2023. • Profit Before Tax: Decreased to Rs 17.5 crores from Rs 121 crores year-over-year. • TMD Division: Revenue dropped by 53%, resulting in a loss of Rs 12.72 crores. • Contributing Factors: Reduced domestic demand, lower order inflows, challenges in subsidiaries in China and the Middle East.
Strategic Focus • Export Business Expansion: Emphasis on UAE subsidiary, LMW Global, consolidating operations in Dubai. • Challenges in China: Staffing issues and operational disruptions; efforts to rebuild team and market presence. • Capacity Utilization: Textile machinery division at 45-50%; Machine Tool Division at 64-70%. • Future Plans: Soft launch of new machines by Q4 2025; optimism for recovery due to improving yarn margins.
Division Insights • Textile Machinery Division: Active order book of Rs 2,100 crores; focus on automation and government PLI schemes. • Machine Tool Division: Acknowledgment of competition from imports; confidence in growth potential. • ATC Division: Profit margins dipped due to investments in composites; metallic segment remains stable.
Q&A Highlights • Team Size in China: Approximately six expatriates and 100 local employees; international export turnover nearing Rs 1,000 crores. • Future EBITDA Margins: Focus on growth investments in machine tools and exports; price pressures from currency fluctuations. • Order Visibility: 90% of ATC business is export-focused; Rs 330 crores of cash balance from customer advances. • Market Share and Competition: Low import threat for turning centers; competitive positioning against peers like Jyoti CNC and ACE Micromatic.
Industry Outlook • Current Sector Status: Range-bound but significant capacity and expansion in India; supported by government initiatives for MSMEs. • Competition: Intense domestic and international competition; focus on providing high-value machines, especially in the auto sector. • Order Backlog: Rs 3,380 crores; execution expected within 12 months, contingent on customer commitments.
Lakshmi Machine Works Limited Q4 FY 2023-24 Earnings Call Summary
Financial Performance • Turnover: Rs 4,520 Crore (stable year-on-year) • Profit Before Tax (PBT): Rs 480 Crore
Division Performance • Textile Machinery Division (TMD): • Revenue decline: 27% • Reasons: Reduced order intake, cotton price impacts • Machine Tool Division (MTD): • Revenue increase: 7% • Drivers: New models, market expansion • Aerospace Division: • Revenue increase: 45% • Main contributor: Exports, strong order book
Aerospace and Technology Corporation (ATC) Division • Turnover: Declined from Rs 49.51 Crore to Rs 27 Crore • Challenges: Lack of "pull-ins" from long-term orders • Export Focus: 90% of turnover from exports • Growth Potential: Emphasis on strategic investment in domestic market
Machine Tools Division (MTD) Insights • Turnover: Approximately Rs 840 Crore • Capacity Utilization: 65% • Order Book: Rs 3,520 Crore (down from Rs 5,500 Crore) • New Developments: Robotic auto piecing, Airjet technology
Market Impact and Share • Air-jet Technology: Potential to increase addressable market by Rs 1,200 Crore • Market Share: • Domestic: Over 72% • Global: Estimated 12-15%
Revenue Breakdown • Domestic Sales: 70% of total revenue • Spares Revenue: 19% • Traditional Products: 75-80% of revenue mix
Future Outlook • Growth Potential: Double-digit growth in domestic defense and aerospace • Product Development: Scaling up production for global leaders, new products under testing
Conclusion • Call Dynamics: No further questions raised; focus on clarifying technologies and market strategies.
Lakshmi Machine Works Limited Q3 FY 2023-24 Earnings Call Summary
Company Performance • Turnover: Rs 1,166 crore (10% decrease from previous quarter, 10% increase year-to-date). • Profit Before Tax (PBT): Rs 395 crore (12% increase). • Order Book: Rs 4,000 crore. • Revenue Breakdown: • 65% domestic sales • 21% exports • 14% spares
Division Highlights • ATC Division: Significant growth with a focus on exports, especially in metallic components for aircraft manufacturing. • Textile Machinery Division: New product launches, including the LAW 60 winding machine (market size of USD 1.7 to 2 billion).
Future Goals and Market Outlook • Aerospace Sector: Acknowledged global opportunities but emphasized competitive market dynamics. • Repetitive Business: Approximately 95% of turnover from repeat orders. • Challenges: Recent decline in order book due to textile industry issues and external factors like the Red Sea situation and COVID-19 restrictions in China.
Responses to Inquiries • Order Book Status: Rs 4,000 crore, with a slight decline noted. • Machine Tools Division: Flat turnover and lower margins due to capacity investments; confidence in future growth. • Textile Division: 1.3-1.4 million spindles supplied, with a noted decrease from the previous year.
Market Conditions • Automotive Sector: Largest customer but experiencing a slowdown. • Competition: Optimism for long-term growth driven by "China + 1" strategy and GDP growth.
Strategic Focus • Expansion Plans: No new machine types beyond existing turning centers and machine centers; focus on current market size of Rs 5,000-6,000 crore. • Future Demand: Ongoing challenges in predicting demand; potential revival expected in 2-3 quarters.
Conclusion • The call concluded with no further questions, reflecting a cautious yet optimistic outlook for LMW's future performance and market positioning.
Lakshmi Machine Works Limited Q2 FY 23-24 Earnings Call Summary
Financial Performance • Quarterly Turnover: Increased by 11% to Rs 1,285 crores. • Half-Year Turnover: Increased by 16% to Rs 2,441 crores. • Profit Before Tax: Rose by 22% to Rs 270 crores. • Order Book: Approximately Rs 4,300 crores, with 75% from domestic sales.
Investor Inquiries • Chetan Doshi's Questions: • Future plans for LMW Aerospace Limited. • Impact of significant shareholder on board representation. • Manish Goyal's Questions: • Clarification on domestic and export order books. • Reasons for revenue declines in China. • Status of machine tool business margins and new facilities.
Aerospace and Composite Business • Aerospace Segment: Stable metallics segment with a Rs 300 crores order book. • Composite Business: Requires further investment to reach breakeven.
Market Challenges • China Operations: Difficulty in re-establishing due to COVID-19 restrictions. • Textile Machinery: Facing challenges due to global slowdown and cotton price volatility.
Product Development • New Product Launches: Auto Coner and Air Jet machines expected in Q4. • Investment Focus: High-value components in ATC division with a projected Rs 300-400 crores order book over four years.
Miscellaneous Inquiries • Aniket Mittal's Questions: • Investments in ATC and composite sectors. • Turnover expectations and margin differences in machine types. • Hrithwik Sheikh's Questions: • Order book visibility and dividend payout policy.
Operational Insights • Current Order Book: Stands at Rs 6,000 crores. • Capacity Utilization: Company aims for more than current levels despite challenges. • Spindle Prices: Increased by over 20% since pre-COVID-19.
Sustainability and Future Outlook • Sustainable Manufacturing: Machines can handle both virgin and recycled fibers. • Revenue Breakdown: 90% from metallics, with ongoing monitoring of inquiries from events like Mactech.
Conclusion • Future Growth: Optimistic outlook while navigating market challenges. • Closing Remarks: Senthil wished everyone a happy New Year and looked forward to the next quarter.
Financial Performance • Q4 FY 22-23 Earnings: • Turnover increased by 48% to INR 4,457 Crores. • Profit before tax rose by 91% to INR 485 Crores.
Division Performance • Textile Machinery Division (TMD): • Revenue: INR 980 Crores for the quarter; INR 3,648 Crores for the year. • Strong order book: INR 5,930 Crores.
• Machine Tool Division: • Turnover increased by 18%.
• Foundry Division: • Grew by 23%.
Strategic Focus • Emphasis on maximizing capacity utilization and addressing bottlenecks. • No plans for mass capacity expansion.
Analyst Q&A Highlights • Concerns Raised: • Slowdown in textile order inflow and supply chain issues in machine tools.
• CFO Insights: • Recent decline in textile machinery orders due to previous surges and spinning industry challenges. • Expected stabilization in order flow. • Supply chain challenges affecting electronic components in machine tools.
Order Book and Margins • Order Book Composition: • Primarily domestic orders and letters of credit totaling approximately INR 5,930 Crores.
• Gross Margins: • Rise in material costs post-April; recent price adjustments for TMD machines.
Operational Insights • Machine Tool Division: • Revenue flat; reduced margins due to product mix changes.
• Textile Machinery Division: • Revenue breakdown: 64% domestic, 24% exports, 11% spares.
International Operations • China Operations: • Revenue increased to INR 273 Crores; profits rose to 23%.
Future Outlook • Order Delivery Timelines: • Ranges from 9 to 16 months.
• Growth Expectations: • Gradual growth in TMD; faster growth anticipated in machine tools.
Capital Expenditure • Planned investment of over INR 100 Crores to address bottlenecks.
Conclusion • The company remains focused on strategic growth in both textile and machine tool sectors while navigating cyclical industry challenges.
Company Performance • Turnover: ₹3,262 crore, a 57% increase year-on-year. • Profit Before Tax: ₹350 crore, up 109%. • Order Book: Strong at ₹5,600 crore despite challenges.
Challenges Faced • Supply Chain Disruptions: Impacting operations and costs. • Rising Costs: Affecting margins, particularly in the machine tool division.
Segment Performance • Exports: Growth noted in various divisions, including TMD and MTD. • Domestic Order Book: Decline observed; ongoing demand shifts due to geopolitical factors.
Advanced Technology Division • Demerger Plans: In process to attract a strategic partner. • Current Turnover: ₹77 crore with a potential order book of ₹500 crore over four years.
Machine Tool Division Insights • Demand: Strong, especially in the non-auto sector. • Capacity Utilization: Approximately 60-65%. • Order Flow: 60-65% unitary machines, 30-40% project orders.
Financial Outlook • Margin Challenges: High power costs, forex impacts, and raw material prices. • Revenue Breakdown: 60% domestic, 20% exports, 20% spares.
Future Growth Opportunities • New Product Categories: Focus on increasing market share domestically and internationally. • Production Linked Incentive (PLI) Scheme: Optimism about its benefits for the industry.
Spare Parts and Composites Division • Spare Parts Demand: Currently lower due to reduced machine utilization. • Investments: Ongoing in the composites division, affecting overall margins.
Conclusion • Operational Efficiencies: Confirmed sustainability of TMD margins. • Inactive Order Book: 12-15% of the domestic segment in a ₹5,600 crore order book.