Lakshmi Machine works with a Coimbatore based textile machinery manufacturer. It's a old well-established company, practically a monopoly in India and one of the biggest in the world.
The textile companies have been getting a fresh lease of life with the huge textile modernization fund the government has given them. So, LMW is having a very strong order traction of about two years revenues it's got in the form of orders. Incrementally all these orders are going about Rs 1,000 crore per quarter.
The company did very well in the last quarter. The revenues going up by more than 50% and the profits also about 50%. The EBITDA level, the company had a bit of problem because they have started a big Chinese operation which is getting ramped up. They also had a labor settlement with the workers.
But it's a very strong company and it's a zero debt company. It's a cash rich company. And among the capital goods manufacturers I think it's got a very strongest balance sheet.
In terms of price earnings it's at 15 times and historical it's 11-12 times its forward. It's got a very good brand equity in the textile industry. It has a waiting period of about one year for its supplies.
So LMW at about Rs 2,100 plus is fairly safe bet. One could expect it to go above Rs 2,500 or so in the next 12 months.
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