Lakshmi Automatic Loom Works Ord Shs
Lakshmi Automatic is a small-cap company. Its market cap is currently Rs 519.22 crore. The stock increased by 48.74 per cent in 5 trading sessions last week. This stock rose from Rs 554 to Rs 776.40 in 4 days. On Friday, it closed at Rs 776.40 with a gain of 10 per cent. But keep in mind that investing in the shares of a small company carries more risk. So keep this in mind before investing.
About Lakshmi Automatic Loom Works
The Lakshmi Mills Group is well known in the Indian textile industry. The flagship company, The Lakshmi Mills Company Ltd., has been established more than 100 years ago. The name of Lakshmi Mills has become synonymous with quality cotton and synthetic textiles. The group started a number of other enterprises with the aim of making the group a complete player in the field of textiles. Today, the group is a complete textile house with units engaged in manufacturing various textile machineries with distinction.
The need for sophisticated and high quality weaving machines prompted the management to establish Lakshmi Automatic Loom Works Limited in the year 1973. The company in collaboration with Ruti Machinery Works Ltd, Switzerland manufactured high-speed automatic ‘C’ type weaving machines and Air jet weaving machines. The company’s second Unit at Singarampalayam in Coimbatore District manufactured Circular Knitting machines in collaboration with Terrot, Germany.
The company continues to manufacture spares and accessories for weaving and knitting machines and parts for machines tools. With the thrust on Shuttleless looms the company is discussing with prospective overseas machinery manufacturers for a tie up for manufacture of shuttleless weaving machines.
Lakshmi Automatic Loom Works Ltd is committed to sound practice of corporate functioning and fulfilling the customer’s needs by offering quality products and after sales service.
KEY POINTS
Engineering Services (~53% of revenues)
The company is licensed to manufacture high-speed automatic Weaving Machines and Circular Knitting Machines at their Pollachi (Coimbatore) unit. It also exports Weaving and Circular Knitting Machines to Europe, China and others. It is currently manufacturing and supplying products such as VDI Standard, Tool Holders, Rectangular Tool Holders, VDI Non-Standard, etc.
Warehouse Rental Services (~47% of revenues)
The company has leased out ~2.5 lakh sq. ft. warehouse area to various reputed large logistics companies at Hosur (Tamil Nadu). It also possess a large land bank available and is in continuous process of construction of new modern warehouses.
In FY20, the additional warehouse constructed during the FY was let-out to a corporate tenant for five years.
Geographical Revenue Breakup
In FY20, India accounted for ~59% of revenues and export accounted for ~41% of revenues (FY19 - 10%). All of export sales were from the company's engineering services business.
Developments in FY20
The market for the company's C-type Shuttle Loom has become obsolete due to advancement in technology and arrival of shuttleless technology. Now, the company only manufactures spares and accessories of shuttle looms and parts for machine tools under its engineering services business.
Outlook
The company plans to add more warehousing capacity which is proposed to be taken-up depending on the demand post Covid-19 situation.
PROS
- Company has reduced debt.
- Company is almost debt free.
- Company has delivered good profit growth of 54.82% CAGR over last 5 years
CONS
- Stock is trading at 13.50 times its book value