LMW Limited (500252) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the earnings call of LMW Limited for Quarter 1 of FY '26-'27 hosted by NSDL. Please note that this call is being recorded, and this is Sameer from NSEL. We have with us Mr. V. Sental, Chief Financial Officer; and [ Ma'am B. Danilakshmi ], Associate Vice President of the company. And now over to you, sir.

Thank you. Thank you, Mr. Sameer. A very good afternoon to everyone, and thank you for joining the LMW earnings call for Q1 FY '26, '27. We will have a brief about the overall performance of the company for the period ending June '26, followed by an interactive session. I would also like to clarify that certain statements made in the discussion during the call will be forward-looking in nature. To begin with, let me explain the overall performance of the company, then we will go into segment-wise and consolidated performance. The financial results have been posted on the company website, and I hope you had an opportunity to go through the same. The revenue for the period ended June '26 is INR 891 crores as against INR 899 crores for March '26, which is almost flat. When compared to June '25 -- quarter ended June '25, which was INR 722 crores, that's an increase of 24%. The PBT for the period stands at INR 85 crores as against INR 72 crores for the previous quarter with an increase of 18%. And when compared to the quarter ended June '25, where it was INR 34 crores, that's an increase of around 151%. Going to division-wise detail, PMD revenue stands at INR 482 crores for the current quarter as against INR 485 crores for the previous quarter and revenue for the quarter ended June '25 was INR 415 crores, which is -- now it is up by 16% compared to the current quarter. With respect to the order book, currently, we hold an order book of INR 3,200 crores for TMD, of which the active orders are around INR 2,400 crores. With respect to sales, which has been clocked during the current quarter, the ratio of domestic to export and spares, the ratio stands at 64%, 10% exports and 26% spares. With respect to LMW Global, the turnover for the quarter stands at INR 51 crores as against a comparative number of INR 54 crores for the previous quarter. For the current quarter, the loss stands at INR 5.6 crores as against loss of INR 5 crores for the previous quarter and the order book stands at INR 22 crores. In LMW China, for the quarter, the turnover is INR 11 crores and comparative period last year, it stood at INR 76 crores and the loss during the current quarter is INR 7 crores as against a loss of INR 11.5 crores during the previous quarter. The order book on hand in China stands at INR 128 crores. Now I move to Machine Tool division and Foundry. The revenue in Machine Tool division and Foundry stands at INR 434 crores for the current quarter as against -- I'm sorry, it is INR 343 crores for the current quarter as against INR 352 crores for the previous quarter, and it was INR 251 crores for the quarter ended June '25. Out of this, around 8% relates to Foundry division, the balance is towards Machine Tool division. With respect to ATC, the revenue for the current quarter stands at INR 60 crores as against INR 57 crores for the previous quarter and for the quarter ended June '25, it was INR 46 crores. At a consolidated level, the revenue stands at INR 902 crores for the current quarter as against INR 972 crores during the previous quarter and the profit is at INR 75 crores as against INR 78 crores during the previous quarter. With this brief, I would like to continue to the interactive session. Over to you, Mr. Sameer.

So thank you so much for addressing the people we have with us. Ladies and gentlemen, at this time, we go ahead with the interactive session. We request the quest we have with us Mr. [indiscernible], thank you so much for joining us.

Yes. So congratulations on the good set of numbers. I just wanted to ask that since we are expanding into 6 new divisions, what actually triggered this plan of expanding into 6 different divisions?

Any other questions?

Yes. I also have one follow-up -- not a follow-up question, but yes. So pharma and specialty chemical is not -- is a very different part that we don't match with in any sense. So how does -- how did the Board come up with thinking of launching into the pharma and specialty thing? That's it for...

Any other questions, Mr. [indiscernible]?

No, that's it for me.

The current businesses. Okay. I think, yes, this is an enabling resolution. The idea is to -- and it is not just pharma chemical, you'll have EV there, you've got advanced technology center there. The idea is that we are looking at various options which are available, and this is an enabling resolution. Anything which is significant, which needs to be informed, definitely, we'll bring it. It will get published and it will get informed to the shareholders. But as of now, it's an enabling resolution where we are looking at multiple options.

Thank you so much. This is Mr. [indiscernible] with the questions. Go ahead, request please raise your hands so that we can take forward. moment among the attendees we have no hands raised. Hence, we do. Next person who has his hand raised is Mr. [indiscernible].

I just want to understand how are you thinking about your order book in terms of the domestic market, particularly in the textile division? And what are the positives you are actually seeing given the fact that there has been a lot of noise around this tariff fluctuations, et cetera. And how secured is our order book? What kind of -- I think a year back, we were fully booked. I just want to understand that point of view, what kind of visibility we have, both on the industry and our own order book in the domestic for textiles.

Any other questions?

As of now, only one question, sir.

Thank you. So -- thanks for the question. The -- like I mentioned, the order book is at INR 3,200-odd crores. This is definitely from a secured order book. Yes, it's a secured order book because what we take into order book is only where we have 10% deposit, right? And so that order book is secured. It was almost 2 years back, we were running full with the delivery of closer to 14, 15 months plus. Today, the situation is not such at least in the last 2 years, the deliveries have quite shrunk. But at the same time, the posters of this is that if you look at -- there are a lot of state policies which have come, Gujarat, Orissa and I think Madhya Pradesh, there's a specific region, DA region, I think. I think that is -- these are the policies which are kind of triggering a lot of activity within the order book and also for new order book. So specifically on -- in Gujarat, there's a new policy, state policy which has come, which includes spinning also as part of the policy for subsidies. So these are the triggers which are helping in the outlook and also the fact that over the last 2 years, there has been a slowdown in the overall offtake. However, we did see a steep order inflow during the last quarter. And we also see that all these other activities which are going on, we see that there will be further orders which will get booked for delivery because consistently, our experience is that consistently, you can't have low installation of spindles over multiple years. It will come back. It will come back. It is only that how quickly it comes back is the question. 3 years back, there was a very sharp uptick. This year, we are not seeing a very sharp uptick, but we are very positive. There will be a gradual increase in absorption of spindles as well, plus, like I said, the state policy, plus the FTAs. So the fact that FTAs are going to -- will fall in place, in certain cases, have started, those benefits will all result in back process having a strong demand on the back process of spinning. And I should also add that this is the domestic context, but it is also important to understand that even us -- even the yarn, which is fun here is exported significantly, right? So the fact that other countries today are having the same challenges like what we have on the energy, cost of energy, et cetera, but perhaps we are able to handle it a little bit better. I think that is also another reason where we feel that over a period of time, the modernization and the new projects will again kick start and investments would happen. With respect to margins, there the cotton spinning margins are fairly good at the moment. The margins on synthetic are under a bit of a strain. But they are still making money and it would have -- they would have to modernize either which way or it would be very difficult for them to be cost competitive and cost efficient. So this would definitely happen. So that is where we see the positives going forward, the FTAs, the state policies, all contributing to this.

Going ahead, the next person we have with us is Mr. Ritwik Sheth. Thank you so much for joining us. It's time we go ahead with your questions, please.

Am I audible?

Sir, we can hear you, but the voice is [indiscernible].

Sir, on the domestic again, right, what I understand is that there has been excess spindlage and there have been some [indiscernible] spindles and people are not utilizing full, and that's what I hear. And therefore, there is a concentration of companies with more than 1 lakh spindles. I see there are only a handful of -- maybe not more than 20 companies would have more than 1 lakh spindles at one point in time in aggregate. So this 3,600 order book, can you just tell me what kind of -- how many companies are actually taking this and whether it is going towards companies which have more than 1 lakh spindles in them or this is happening for modernization where they're actually replacing the old with new -- can you just give some color on that? Because we see that interest rates will be going up shortly. And therefore, it actually put pressure on companies where they cannot really get a lot of tax advantage. So I just want to hear your thoughts as to whether how sustainable is this? And what kind of customers are actually putting these orders and these customers are putting it for modernization or greenfield? Some color would be helpful.

See, the -- I mean, I think you're just -- okay. First of all, Mr. Lakshman, we prefer to take all questions at one shot and then answer one after another. Do you have any other questions?

No, sir. This is essentially a stand-alone question because you mentioned that I wanted to ask just based on your answer. But anyway, nevertheless, I appreciate your point, and I will -- this is my only question, sir.

Okay. See, the way we look at the order book as multiple cuts, right? One is you've got projects, one is Unit 3. Project, when we call it, we call it -- it's ATC, all machinery right from the opener machine till the spinning machine. The second thing are unitary machines. Unitary machines and which basically are both modernization projects, which means that it happens over a period of time. I mean it takes -- they start with one set of machines and they would -- over a period of a year, 2 years, will modernize all the machines. Then you will have cases of unitary missions where they are only upgrading a machine for better productivity, better automation, et cetera. That is the way we look at the order book. And of course, within this, you've got cotton synthetic projects cotton, which both types of projects which come into play. In general, in a good year where there's an uptick, a lot of spindles getting added. Generally, you will find 60% would go towards projects, 40% would go towards unit missions or non-project machines. But as far as in a year like what we have seen over the last couple of years, the case would be less of projects because this is a heavy CapEx heavy industry. When the outlook is not very positive, generally going in for a full CapEx, full new project, adding up capacity is not a decision which is easily taken unless it's an integrated back-to-back units. We generally don't give out information on who are the customers, what is the spec of the order book in terms of large customer or small customer because for us, you will have to -- from an India domestic standpoint, the spending is spread across the region. And there are a lot of conversion also happens. It is not that it is purely down to large players doing the end product, right? There is a chain of supply chain available for this ecosystem, the people or converters, the large integrated mills. Today, if you look at the last TUF scheme, which was introduced, it was applicable only for integrated players. Today, if you look at PLA, it is only applicable for large integrated players. It is -- spinning is part of it, but applicable only for large integrated players. The way government is looking at it is to kind of build large customers, large players with. Because the when competing at scale, you need this kind of companies which compete at scale with the likes of China, right? So that is the reason the schemes are all towards that. But having said that, there is value in the entire segment. So you will find a value for a person who is doing end-to-end up to your last [indiscernible] and you have players who are predominantly only in spinning, and we also have players who are only doing conversion. There's a plethora of -- I mean these variances you would find within the -- within our order. I hope that answers the question. We do not give you details. I mean it's not practical to look at it saying that these people are only converting this people. It's not the way to look at it and [indiscernible].

So, thank you so much for answering that one. Going ahead, our next person now we have with us, as Mr. Krish Mehta.

This is Krish from [ Enam ] Holdings. I wanted to just get a few data points updated, if possible. The first is on the ATC division. If you could provide the split between composites and metallics as well as domestic versus export. The second is on the order book, what is the export order book versus the domestic order book? And the last question is on the TMD division, if you can provide the current capacity utilization. And on the previous question, which you mentioned on projects versus unitary, what is the current mix that you are seeing this quarter or for the year, if you could provide any clarity on that, if possible? Thank you.

I think with respect to the split, it is still 90-10. That is 90% export and -- what you call? 10% domestic. Composite metallics, it is around -- just 1 second. Yes. 20% within this turnover 20% is composite and 80% is the [indiscernible] of it. Any other questions on ATC? With respect to machine tool division, the capacity utilization will be in the region of 75% to 80%. We can still push out more missions. There will be CapEx, which is to be required for increasing it beyond which we will be planning and we'll be investing in MPD as we go along. But yes, we'll be at around 80% capacity equation at the moment. And capacity utilization is also dependent on the type of machines we make. And as we start pushing out more BMCs, Machine Centers, rather, the necessity to invest more into [indiscernible] arises. I think you had asked the ATC order book. The order book for ATC is in the region of INR 1,000 crores of orders for execution over a period of 3 years to 3.5 years. That is the order book of ATC formula, which is tied up for execution fully. Only thing you may have a little bit push into of these order books within this within a quarter or within a couple of quarters, but that is for execution. Between project and unitary machines for the previous question of Mr. Lakshmana here, the order would still have close to 70% of projects and 30% of unitary machines within the order book, what we mentioned.

Thank you so much, sir. Mr. Krish had his hand raise, but has lower it.

Yes. No. No, sorry, Mr. Senthil, I just wanted to follow up on that, just to clarify. My question on the capacity utilization was also for the textile machine division. So if you could just give the capacity utilization of the TMD division, and on the order book, it was more for the overall company of the total order book, what is export versus domestic, not for just any division particularly?

For the export order books are not very -- we want have long-term export outlook, right? The export order book is predominantly on division, which I said were of the order book of pots 90%. You'll have to put it together. And I did read out where we said around 22 plus 128 around or INR 150 crores of acceleration of our order book is exports. But these are all more LC-based right? I mean they are all LC-based. So as the orders come in, we generally don't discuss pipeline. There's only the actual LCs on hand. So it is -- you can take INR 900 crores in ATC as export for 3 years [indiscernible] and INR 150 crores for immediate delivery as far as TMA is concerned in its subsidiary. And MTD, it is all more of a very short-term short-cycle order book. We don't -- it's all within 3 months. We book order and deliver within 3 months. So we actually don't follow through on those. It was basically cash and delivery. So when we get the money, then we tell you about it.

The next person with the hand raised is Mr. [ Manish Goel ]. Manish, we are ready for you. Can we proceed with the questions, please?

Yes. Hello. Can you hear me, sir?