Release Date: October 29, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- LMW Ltd (BOM:500252, Financial) reported a 14% increase in quarterly revenue, reaching INR750 crores compared to the previous quarter.
- The company holds a substantial order book of INR3,300 crores, with active orders around INR2,500 crores, indicating strong future business potential.
- The machine tool division's revenue increased by 4% quarter-over-quarter, showcasing growth in this segment.
- The company is optimistic about future demand due to new policies, such as the Gujarat policy, which could positively impact the textile sector.
- LMW Ltd is expanding its global presence, with significant export orders and a strategic focus on long-term contracts in the metallics division.
Negative Points
- There was a 43% decrease in half-year revenue compared to the previous year, indicating significant challenges in maintaining growth.
- Profit before tax (PBT) decreased by 79% compared to the previous period, highlighting financial pressure.
- The textile machinery division is operating at only 45% to 50% capacity, reflecting underutilization and potential inefficiencies.
- The company faces challenges in international markets, particularly in Bangladesh and Turkey, due to economic and forex issues.
- The foundry division is experiencing losses, contributing to overall margin pressure and affecting profitability.
Q & A Highlights
Q: What is the outlook for demand in the textile sector given the current sluggishness?
A: Senthil Vishwanathan, CFO: The textile sector has faced challenges, particularly in profitability and yarn uptake. However, recent quarters have shown a slight improvement in order bookings, though they remain below execution levels. The new Gujarat policy is expected to positively impact the manmade fiber segment, potentially improving domestic demand. Internationally, Bangladesh and Turkey face challenges, but potential orders could materialize in the coming quarters.
Q: Can you provide details on the upcoming launches in the machine tool division and the growth outlook?
A: Senthil Vishwanathan, CFO: The Auto Corona and spinning machines are set for soft launches by the end of the year. The machine tool division sees significant potential, with a shift from 55% auto sector sales to 40%, and 60% in non-auto sectors, particularly engineering. The division operates at 70% capacity, with room for growth.
Q: What is the current active order book, and are there opportunities in the defense sector?
A: Senthil Vishwanathan, CFO: The active order book is around INR 2,500 crore for the textile division. LMW is open to working with defense industry players, focusing on long-term contracts with dollar revenue. The company specializes in structural and engine parts, aligning with its capabilities.
Q: How is the T&D business performing, and what are the plans for the UAE operations?
A: Senthil Vishwanathan, CFO: The order book is approximately INR 3,300 crore, with quarterly bookings around INR 200-220 crore. In the UAE, LMW Global focuses on assembly for exports, with no major manufacturing investments planned. The A TC business has an order book of INR 200-300 crore, with visibility for 1.5 years.
Q: What is the impact of the auto sector slowdown on LMW's volumes, and what is the expected growth in the MTD division?
A: Senthil Vishwanathan, CFO: The auto sector slowdown has not significantly impacted LMW due to a diversified sales mix, with only 40% reliance on auto. The non-auto sector, driven by engineering and PLI schemes, is growing. The MTD division has room for growth, operating at 70% capacity, with a positive outlook for the non-auto sector.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
