Wednesday, May 25, 2011

Lakshmi Machine Works - RU4QFY2011 - Buy

Dear All,

 

Forwarding you the Result Update on Lakshmi Machine Works for 4QFY2011 with a Buy recommendation and a Target Price of `2,780(12 months).

 

Lakshmi Machine Works (LMW) posted strong top-line growth of 49.3% yoy to `528cr (`354cr) during 4QFY2011, which was in line with our expectations. However, OPM fell by 238bp to 11.1%, which was lower than our estimates, mainly due to higher raw-material and employee costs. PAT grew strongly by 44.1% yoy to `44cr. Operations in the Chinese subsidiary have not picked up as per our expectations and the subsidiary reported sales of only `20cr. We have revised our sales estimates for FY2012 and FY2013 downwards by 4.2% and 3.3%, respectively, to `2,350cr and `2,883cr. PAT estimates have also been revised downwards by 9.6% and 5.6% to `202cr and `261cr, respectively.
We maintain our Buy recommendation on the stock.

Order book swells to `4,700cr: The company has recorded yet another quarter of high order inflow, reflecting the strong demand from textile machinery manufacturers. The company’s order backlog now stands at `4,700cr, while the total order inflow during FY2011 stands at ~`3,000cr.

Outlook and valuation: We remain positive on the company’s outlook, given a strong order book of `4,700cr. Although yarn prices have shown signs of correction in the recent past, overall demand, as reflected in the order inflow, is still robust. Spinning mills continue to operate at high utilisation levels. At the CMP, the stock is trading at 11.6x and 9.0x its FY2012E and FY2013E EPS, respectively, which we believe is attractive. We maintain our Buy recommendation on the stock with a target price of `2,780.

 

Kindly click on the following link to view the Report.

 

Lakshmi Machine Works - RU4QFY2011

 

 

If you have any further queries, feel free to call us on 022 39357600, Extn: 6865 or mail us at advisory@angelbroking.com

 

With best regards,

Fundamental Advisory Desk

Angel Broking

Akruti Star,6th Floor, Road No.7,MIDC, Andheri (E),Mumbai – 93.

Call         : (91) (022) 39357600 Ext. 6865

Website  : www.angelbroking.com

 

Disclaimer: Ours is an advisory role. The final decision and consequences based on our information is solely yours. Moreover, in keeping with regulatory guidelines, we do not guarantee any returns on investments. Prospective investors and others are cautioned that any forward-looking statements are not predictions and may be subject to change without notice.




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