Lakshmi Machine Works Net Income surged on 16.2% in 2015 and EBITDA Margin increased slightly on 1.2 pp from 11.7% to 12.9%

21-05-2015 • About Lakshmi Machine Works ($LAXMIMACH) • By InTwits

Lakshmi Machine Works reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:

Lakshmi Machine Works has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.9%. At the same time it's in pair with industry average of 4.3%.
CAPEX is quite volatile: 1,185 in FY2015, 785 in FY2014, 456 in FY2013, 1,915 in FY2012, 1,015 in FY2011
The company has highly profitable business model: ROIC is at 17.6%

Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.

Lakshmi Machine Works ($LAXMIMACH) key annual financial indicators

mln. INR	2011	2012	2013	2014	2015	2015/2014
P&L
Revenue	18,242	23,054	20,172	23,378	24,157	3.3%
EBITDA	2,557	2,774	2,289	2,735	3,109	13.7%
Net Income	1,533	1,388	1,296	1,891	2,197	16.2%
Balance Sheet
Cash	7,542	7,105	7,676	9,125	9,739	6.7%
Short Term Debt	0	0	0	0	0
Long Term Debt	0	0	0	0	0
Cash flow
Capex	1,015	1,915	456	785	1,185	51.0%
Ratios
Revenue growth	-38.4%	26.4%	-12.5%	15.9%	3.3%
EBITDA growth	34.4%	8.5%	-17.5%	19.5%	13.7%
EBITDA Margin	14.0%	12.0%	11.3%	11.7%	12.9%	1.2%
Net Income Margin	8.4%	6.0%	6.4%	8.1%	9.1%	1.0%
CAPEX, % of revenue	5.6%	8.3%	2.3%	3.4%	4.9%	1.5%
ROIC	16.8%	18.0%	11.7%	16.2%	17.6%	1.4%
ROE	17.7%	16.4%	14.1%	18.3%	18.4%	0.1%
Net Debt/EBITDA	-3.0x	-2.6x	-3.4x	-3.3x	-3.1x	0.2x

Revenue and profitability

Lakshmi Machine Works's Revenue increased on 3.3% in FY2015. Revenue growth happened at the same time with EBITDA margin expansion. EBITDA Margin increased slightly on 1.2 pp from 11.7% to 12.9% in FY2015.

Net Income marign increased slightly on 1.0 pp from 8.1% to 9.1% in FY2015.

Capital expenditures (CAPEX) and working capital investments

The company's CAPEX/Revenue was 4.9% in FY2015. The company's CAPEX/Revenue decreased on 3.4 pp from 8.3% in FY2012 to 4.9% in FY2015. Average CAPEX/Revenue for the last three years was 3.5%.

Return on investment

The company operates at good ROIC (17.63%) and ROE (18.38%). ROIC increased slightly on 1.4 pp from 16.2% to 17.6% in FY2015. ROE showed almost no change in FY2015.

Leverage (Debt)

The company has no debt. Cash increased on 6.7% in FY2015.

Appendix 1: Peers in Industrial Machinery

Below we provide Lakshmi Machine Works benchmarking against other companies in Industrial Machinery industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Forbes & Company ($FORBESCO)	-66.3%	22.4%	13.0%	53.4%
Nitin Fire Protection Industries ($NITINFIRE)	-67.4%	22.3%	31.5%	44.2%
Gmm Pfaudler ($GMM)		-26.1%	47.8%	31.0%	10.3%
Kabra Extrusiontechnik ($KABRAEXTRU)	-32.6%	-13.3%	-8.7%	28.4%
Veejay Lakshmi Engineering Works ($VJLAXMIE)	27.9%	-28.8%	5.7%	26.6%
Median (26 companies)	-24.2%	14.1%	2.3%	0.9%	11.5%
Lakshmi Machine Works ($LAXMIMACH)		26.4%	-12.5%	15.9%	3.3%

Top companies by Gross margin, %


Top	FY2011	FY2012	FY2013	FY2014	FY2015
Bell Agromachina ($BELAGRO)		0.0%	0.0%	0.0%	0.0%
Median (1 company)		0.0%	0.0%	0.0%	0.0%

Top companies by EBITDA margin, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Lokesh Machines ($LOKESHMACH)	14.7%	18.9%	21.9%	24.0%
Wendt (India) ($WENDT)	30.8%	28.3%	21.6%	18.6%	19.0%
Mazda ($MAZDALTD)	14.4%	14.5%	16.2%	15.0%
Ksb Pumps ($KSBPUMPS)	9.9%	13.1%	14.1%	12.6%
Abc Bearings ($ABCBEARS)	22.6%	16.5%	12.9%	12.1%	13.3%
Median (22 companies)	13.5%	10.7%	9.4%	10.0%	11.1%
Lakshmi Machine Works ($LAXMIMACH)	14.0%	12.0%	11.3%	11.7%	12.9%

Top companies by CAPEX/Revenue, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Lokesh Machines ($LOKESHMACH)	18.5%	22.1%		12.9%
Elgi Equipments ($ELGIEQUIP)	2.8%	4.0%	24.0%	9.8%
Wendt (India) ($WENDT)	7.2%	13.5%	9.0%	8.8%	9.4%
Ksb Pumps ($KSBPUMPS)	3.3%	7.5%	3.5%	5.0%
Honda Siel Power Products ($HONDAPOWER)	4.3%	6.7%	8.0%	3.7%	4.3%
Median (19 companies)	3.4%	5.5%	4.1%	2.7%	4.3%
Lakshmi Machine Works ($LAXMIMACH)	5.6%	8.3%	2.3%	3.4%	4.9%

Top companies by ROIC, %


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Rexnord Electronics & Controls ($REXNORD)	10.4%			18.8%
Gmm Pfaudler ($GMM)	14.2%	-76.2%	6.8%	17.4%	18.2%
Greaves Cotton ($GREAVESCOT)			24.8%	16.3%	26.7%
Wendt (India) ($WENDT)		38.2%	20.2%	16.2%	15.1%
Nitin Fire Protection Industries ($NITINFIRE)			13.2%	14.7%
Median (51 companies)	14.6%	12.6%	10.2%	9.2%	11.6%
Lakshmi Machine Works ($LAXMIMACH)	16.8%	18.0%	11.7%	16.2%	17.6%

Top companies by Net Debt / EBITDA


Top 5	FY2011	FY2012	FY2013	FY2014	FY2015
Chemtech Industrial Valves ($CHEMTECH)	7.7x	6.4x	5.3x	8.8x
Forbes & Company ($FORBESCO)	3.5x	2.2x	3.3x	4.7x
Lokesh Machines ($LOKESHMACH)	4.0x	3.7x	3.3x	4.6x
Elecon Engineering Co ($ELECON)	3.1x	3.0x	3.2x	4.0x	3.1x
Lloyd Electric & Engineering ($LLOYDELENG)	4.0x	3.2x	3.0x	3.7x
Median (34 companies)	1.3x	1.1x	1.7x	0.0x	0.0x
Lakshmi Machine Works ($LAXMIMACH)	-3.0x	-2.6x	-3.4x	-3.3x	-3.1x

Lakshmi Machine Works stock price chart

Lakshmi Machine Works financials

mln.	FY2010	FY2011	FY2012

Revenue	29,623	18,242	23,054
EBITDA	1,902	2,557	2,774
Net income	998.8	1,533	1,388
CAPEX	202.1	1,015	1,915
Debt	0.000	0.000	0.000
Cash	118.1	7,542	7,105

About Lakshmi Machine Works

Lakshmi Machine Works Limited primarily manufactures and sells textile spinning machinery in India and internationally. It operates in three segments: Textile Machinery, Machine Tool & Foundry, and Advanced Technology Centre. The company offers a range of spinning machines comprising card silver systems, combing systems, and ring spinning systems; and spinning machine components and spare parts, such as gears, spindles, rings, top rollers, cots and aprons, and flyers. It also provides machine tools consisting of turning, milling, and multitasking and turnmill products for various sectors, including auto components, automobile, tool room, industrial machines, motors, pumps, valves, and others. In addition, the company manufactures ductile iron castings, such as windmill castings, locomotive castings, marine transmission castings, traction motor castings, railway undercarriage parts, and traction gearbox housings; and grey iron castings consisting of engine castings, turbo charger castings, heavy pump castings, and hydraulic transmission parts. Further, it provides aerospace parts and components, such as structural parts comprising brackets, stiffeners, frames, fairings, wings, ribs, fuselage, etc.; engine and landing gear parts, including casings, blisks, shafts, housings, stators, NGV, pump housing bushing, sleeves, and sub-assy, as well as LRU`s gear boxes, actuators, and landing gears; and sheet metal fabrications comprising aero engine sheet metal components, assemblies and fabrications, seal segments, rings, heat shields, vane inserts, cover plates, springs, etc. Lakshmi Machine Works Limited was founded in 1962 and is based in Coimbatore, India.