Lakshmi Electrical Control Systems
Electrifying growth
The company is consistently growing its net profit at a CAGR of 50%
| Buy | Lakshmi Electrical Control Systems |
| BSE Code | 504258 |
| NSE Code | Not listed |
| Bloomberg | LKEC@IN |
| Reuter | LKEL.BO |
| 52-week High/Low | Rs 589 / Rs 241 |
| Current Price | Rs 333 (as on 21st May 2008) |
Lakshmi Electrical Control Systems (LECSL) manufactures contactors, thermal overload relays, electrical control panels and industrial plastic components. The demand for switchgear products tracks industrial capex and growth in building construction, while the latter tracks textile machinery usage.
Part of the LMW group
LECSL comes from a very respected south based LMW group. The LMW group is one of the most respected groups in India. The group’s flagship company is Lakshmi Machine Works (LMW). LMW has 60% market share in the domestic Textile Spinning Machinery Industry.
LECSL’s plastic division of the company was set up to support the manufacture of electrical mountings and components for switchgears. Due to excess capacity of machines they are used to manufacture engineering plastic components. The major buyers are Lakshmi Machine Works. The company manufactures textile machinery components using engineering plastics.
Its plastic division’s activity is focused on Engineering Plastic Components. For many economic and technical reason there is an unrelenting shift from metal to plastics in almost every branch of engineering industry. Thus the scope for the company is endless.
A good bet on industrial capex as well
LECSL manufactures contactors, thermal overload relays, control relays, electrical control panels and industrial plastic components. The company has a technical collaboration with Sprecher & Schuh, Switzerland, one of the leading manufacturers of low-tension switchgear items in the world.
Apart from LMW, LECSL caters to many industrial engineering companies. Industrial engineering industry itself is seeing hectic activity and is expected to see continued buoyancy.
The major focus area of the company is into manufacturing of low voltage electrical switchgears and control panels, which is seeing unprecedented growth due to solid growth in the user industries. The low voltage switchgears are contractors, control relays and thermal overload relays. These are components used in power supply systems. All of them are used in industrial applications for power supply. It also finds application in commercial and residential buildings. Contractors are two-state (On-Off) device for repeatedly establishing an interrupting electric power circuit. Relays are electrically controlled device that causes electrical contacts to change status. Open contacts will close and closed contacts will open when rated voltage is applied to the coil of the relay.
Other electrical components include motor starters and motor control panels. Motor starters are made from contractors and thermal over load relays. The company manufactures direct on line and start delta type motor starters. The major revenue driver for the company is from control panels. The company provides customised control panels for OEM companies. These are simple control panels for motor control as well as program logic control (PLC) panels for OEM segment.
Soild performance
For the nine-months ended Dec 2007, net sales grew 58% to Rs 78.78 crore. PBT was up 52% to Rs 13.37 crore and PAT was up 44% to Rs 8.53 crore.
For the quarter ended Dec 2007, net sales grew 107% to Rs 36.03 crore. PBT was up 73% to Rs 5.02 crore and PAT was up 58% to Rs 3.31 crore.
Attractive valuation
For the FY ending March 2008, we expect LECSL to report standalone sales of Rs 114.78 crore and PAT of Rs 11.53 crore. On equity of Rs 2.46 crore and face value of Rs 10 per share, EPS works out to Rs 46.9. The share price trades at Rs 333. P/E works out to just 7.1.
| | 0403 (12) | 0503 (12) | 0603 (12) | 0703 (12) | 0803 (12P) |
| Sales | 25.92 | 39.95 | 49.89 | 68.24 | 115.59 |
| OPM (%) | 16.6 | 20.6 | 20.2 | 20.2 | 20.0 |
| OP | 4.30 | 8.24 | 10.09 | 13.76 | 23.09 |
| Other Inc | 0.48 | 1.09 | 1.38 | 1.96 | 2.54 |
| PBIDT | 4.78 | 9.33 | 11.47 | 15.72 | 25.63 |
| Interest | 0.13 | 1.10 | 1.16 | 1.47 | 1.88 |
| PBDT | 4.65 | 8.23 | 10.31 | 14.25 | 23.75 |
| Dep. | 0.95 | 1.67 | 2.29 | 2.54 | 5.85 |
| PBT | 3.70 | 6.56 | 8.02 | 11.71 | 17.90 |
| Tax | 1.43 | 2.30 | 2.72 | 3.83 | 6.38 |
| PAT | 2.27 | 4.26 | 5.30 | 7.88 | 11.53 |
| EPS (Rs)* | 9.2 | 17.3 | 21.5 | 32.0 | 46.9 |
| * Annualised on current equity of Rs 2.46 crore. | |||||
| Lakshmi Electrical Control Systems: Results |
| | 0712 (3) | 0612 (3) | Var. (%) | 0712 (9) | 0612 (9) | Var. (%) | 0703 (12) | 0603 (12) | Var. (%) |
| Sales | 36.03 | 17.37 | 107 | 78.78 | 49.77 | 58 | 68.24 | 49.89 | 37 |
| OPM (%) | 16.4 | 19.1 | | 20.9 | 20.0 | | 20.2 | 20.2 | |
| OP | 5.92 | 3.32 | 78 | 16.45 | 9.95 | 65 | 13.76 | 10.09 | 36 |
| Other I nc. | 0.71 | 0.52 | 37 | 1.75 | 1.35 | 30 | 1.96 | 1.38 | 42 |
| PBIDT | 6.63 | 3.84 | 73 | 18.20 | 11.30 | 61 | 15.72 | 11.47 | 37 |
| Interest | 0.40 | 0.40 | 0 | 1.28 | 0.97 | 32 | 1.47 | 1.16 | 27 |
| PBDT | 6.23 | 3.44 | 81 | 16.92 | 10.33 | 64 | 14.25 | 10.31 | 38 |
| Dep. | 1.21 | 0.54 | 124 | 3.55 | 1.54 | 131 | 2.54 | 2.29 | 11 |
| PBT | 5.02 | 2.90 | 73 | 13.37 | 8.79 | 52 | 11.71 | 8.02 | 46 |
| Tax | 1.58 | 0.01 | 15700 | 4.16 | 2.23 | 87 | 2.91 | 2.82 | 3 |
| Deferred Tax | 0.13 | 0.79 | -84 | 0.68 | 0.62 | 10 | 0.92 | -0.10 | -1020 |
| PAT | 3.31 | 2.10 | 58 | 8.53 | 5.94 | 44 | 7.88 | 5.30 | 49 |
| EPS* (Rs) | 53.8 | 34.1 | | 46.2 | 32.2 | | 32.0 | 21.5 | |
| * Annualised on current equity of Rs 2.46 crore. | |||||||||
BigGains !!
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