Lakshmi Machine Works reports 8.4% EBITDA growth in 2016 and almost no change in EBITDA Margin of 13.1%

25-05-2016 • About Lakshmi Machine Works ($LAXMIMACH) • By InTwits

Lakshmi Machine Works reported FY2016 financial results today. Here are the key drivers of the company's long term financial model:

EBITDA Margin is relatively stable: 13.1% in FY2016 vs. 12.9% in FY2015 vs. 12.0% in FY2012
Lakshmi Machine Works has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 4.7%
CAPEX is quite volatile: ₹1,195m in FY2016, ₹1,185m in FY2015, ₹785m in FY2014, ₹456m in FY2013, ₹1,915m in FY2012
The company has highly profitable business model: ROIC is 18.2%

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

Revenue and profitability

The company's Revenue increased on 6.7%. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin increased slightly on 1.7 pp from 25.3% to 27.0% in FY2016. During the last 5 years EBITDA Margin bottomed in FY2013 at 11.3% and was growing since that time.

Net Income margin showed almost no change in FY2016. Net Income margin grew at 0.82 pp per annum in the last 5 years.

Investments (CAPEX, working capital and M&A)

In FY2016 Lakshmi Machine Works had CAPEX/Revenue of 4.6%. CAPEX/Revenue increased on 2.4 pp from 2.3% in FY2013 to 4.6% in FY2016. It's average level of CAPEX/Revenue for the last three years was 4.3%.

Return on investment

The company operates at good ROIC (18.2%) and ROE (16.5%). ROIC increased slightly on 0.61 pp from 17.6% to 18.2% in FY2016. ROE decreased slightly on 1.8 pp from 18.4% to 16.5% in FY2016. During FY2012-FY2016 ROIC bottomed in FY2013 at 11.7% and was growing since that time.

Leverage (Debt)

The company has no debt. Cash showed almost no change in FY2016.

Management team

Lakshmi Machine Works's CFO is C B Chandrasekar. C B Chandrasekar has 5 years tenure at the company.

Financial and operational results

Lakshmi Machine Works ($LAXMIMACH) key annual financial indicators

mln. INR	2012	2013	2014	2015	2016	2016/2015
P&L
Revenue	23,054	20,172	23,378	24,157	25,768	6.7%
EBITDA	2,774	2,289	2,735	3,109	3,371	8.4%
Net Income	1,388	1,296	1,891	2,197	2,265	3.1%
Balance Sheet
Cash	7,105	7,676	9,125	9,739	9,709	-0.3%
Short Term Debt	0	0	0	0	0
Long Term Debt	0	0	0	0	0
Cash flow
Capex	1,915	456	785	1,185	1,195	0.9%
Ratios
Revenue growth	26.4%	-12.5%	15.9%	3.3%	6.7%
EBITDA growth	8.5%	-17.5%	19.5%	13.7%	8.4%

EBITDA Margin	12.0%	11.3%	11.7%	12.9%	13.1%	0.2%
Net Income Margin	6.0%	6.4%	8.1%	9.1%	8.8%	-0.3%
CAPEX, % of revenue	8.3%	2.3%	3.4%	4.9%	4.6%	-0.3%

ROIC	18.0%	11.7%	16.2%	17.6%	18.2%	0.6%
ROE	16.4%	14.1%	18.3%	18.4%	16.5%	-1.8%
Net Debt/EBITDA	-2.6x	-3.4x	-3.3x	-3.1x	-2.9x	0.3x

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	FY2012	FY2013	FY2014	FY2015	FY2016
Lloyd Electric & Engineering ($LLOYDELENG)	-	-	-	22.3%	27.3%
Kabra Extrusiontechnik ($KABRAEXTRU)	-	-8.7%	28.4%	21.6%	10.2%
Akar Tools ($AKARTOOL)	21.1%	2.1%	-2.3%	16.7%	-
Honda Siel Power Products ($HONDAPOWER)	-	2.4%	5.0%	16.5%	4.7%
Mazda ($MAZDALTD)	22.1%	14.7%	-15.6%	16.2%	-
Median (27 companies)	17.1%	2.2%	-1.2%	3.7%	6.7%
Lakshmi Machine Works ($LAXMIMACH)	-	-12.5%	15.9%	3.3%	6.7%

Top companies by Gross margin, %


Top	FY2012	FY2013	FY2014	FY2015	FY2016
Bell Agromachina ($BELAGRO)	0.0%	0.0%	0.0%	0.0%	0.0%
Median (1 company)	0.0%	0.0%	0.0%	0.0%	0.0%

Top companies by EBITDA margin, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Texmaco Infrastructure & Holdings ($TEXINFRA)	-	-	-	40.5%	-
Dhp India ($DHPIND)	-	-	-	26.3%	-
Shilp Gravures ($SHILGRAVQ)	-	-	-	19.4%	-
Solitaire Machine Tools ($SOLIMAC)	-	-	-	19.4%	-
Wendt (India) ($WENDT)	28.3%	21.6%	18.6%	19.0%	16.5%
Median (43 companies)	11.2%	9.2%	10.0%	10.2%	11.8%
Lakshmi Machine Works ($LAXMIMACH)	12.0%	11.3%	11.7%	12.9%	13.1%

Top companies by CAPEX/Revenue, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Texmaco Infrastructure & Holdings ($TEXINFRA)	-	-	-	14.0%	-
Wendt (India) ($WENDT)	13.5%	9.0%	8.8%	9.4%	9.3%
Ingersoll-Rand (India) ($INGERRAND)	4.3%	10.9%	3.6%	9.2%	-
Kabra Extrusiontechnik ($KABRAEXTRU)	6.5%	1.8%	0.5%	8.8%	16.2%
Forbes & Company ($FORBESCO)	1.8%	2.6%	3.0%	5.1%	-
Median (21 companies)	5.6%	4.4%	2.7%	3.1%	2.4%
Lakshmi Machine Works ($LAXMIMACH)	8.3%	2.3%	3.4%	4.9%	4.6%

Top companies by ROIC, %


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Greaves Cotton ($GREAVESCOT)	-	24.8%	16.3%	26.7%	25.7%
Gmm Pfaudler ($GMM)	-76.2%	6.8%	17.4%	18.2%	16.1%
Honda Siel Power Products ($HONDAPOWER)	16.9%	8.8%	11.5%	15.3%	18.3%
Wendt (India) ($WENDT)	38.2%	20.2%	16.2%	15.1%	12.6%
Dynamatic Technologies ($DYNAMATECH)	13.8%	11.0%	13.2%	13.9%	-
Median (52 companies)	12.8%	10.2%	9.2%	12.1%	15.8%
Lakshmi Machine Works ($LAXMIMACH)	18.0%	11.7%	16.2%	17.6%	18.2%

Top companies by Net Debt / EBITDA


Top 5	FY2012	FY2013	FY2014	FY2015	FY2016
Forbes & Company ($FORBESCO)	2.2x	3.3x	4.7x	6.3x	-
Nitin Fire Protection Industries ($NITINFIRE)	3.6x	3.5x	3.0x	3.7x	-
Elgi Equipments ($ELGIEQUIP)	-1.2x	2.3x	2.7x	3.3x	-
Lloyd Electric & Engineering ($LLOYDELENG)	-	-	3.7x	3.2x	2.7x
Elecon Engineering Co ($ELECON)	3.0x	3.2x	4.0x	3.1x	3.9x
Median (34 companies)	0.9x	1.5x	0.0x	0.0x	0.0x
Lakshmi Machine Works ($LAXMIMACH)	-2.6x	-3.4x	-3.3x	-3.1x	-2.9x

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.