Religare's research report on Lakshmi Machine Works
LMW had flat textile machinery order inflows in FY16, highlighting the limited capacity addition in the spinning sector. Working capital increased by nine days over FY15 on account of lower security deposits against machinery orders, further pointing to slowing activity in the sector. Our recent channel checks indicate that FY17 is likely to be similarly lacklustre in terms of order flows. Nonetheless, we maintain BUY on LMW backed by its sustainable market share (64%), strong ROCE and healthy cash flows.
We like LMW for its strong cash flows over the entire business cycle and for its high return ratios. We also believe the company can pay higher dividends as cash needs are minimal. Maintain BUY with a Mar’17 TP of Rs 4,000.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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