Lokesh Machines Limited — Credit Ratings, 26-02-2025: Credit Rating- Others

**Consolidated Financials:**

Lokesh Machines Limited (LML) reported consolidated revenues of Rs. 293.54 Cr. for FY2024, reflecting a year-over-year growth of 22.15% from Rs. 240.30 Cr. in FY2023. The growth can be attributed to increased demand revival in the automotive sector, higher utilization levels, and greater investment in CNC machines by clients.

**Profit and EPS:**

Net profit increased to Rs. 13.85 Cr. in FY2024 from Rs. 9.67 Cr. in FY2023, resulting in an EPS of approximately Rs. 1.94. The profit increase is influenced by improved operational efficiency and a strategic focus on high-demand products, despite challenges posed by a sanctions list that could affect revenue streams.

**Operational Costs:**

Operational costs showed improvement, with a notable decrease in GCA days to 223 days in FY2024 from 254 days in FY2023. This is primarily due to decreased inventory days, now at 170 days, indicating better inventory management practices.

**Balance Sheet & Cash Flow Statement:**

The company's financial risk profile remains healthy, with total debt to tangible net worth at 0.60 times as of March 31, 2024. Cash flow generation stood at Rs. 23.82 Cr., against maturing obligations of Rs. 5.37 Cr., showcasing strong liquidity metrics with a current ratio of 1.30 times.

**Strategic Position and Outlook:**

LML's long-standing market presence and strong customer relationships position it well for future growth. However, recent sanctions could constrain operations, with ongoing efforts to resolve these issues. Investors should note intense competition in the industry that may pressure margins.

**Investor Insight:**

Given the healthy revenue and profitability growth alongside robust financial metrics, maintaining a hold position seems appropriate. However, vigilance is advised regarding the regulatory landscape and its potential impacts on future performance.