💰 Financial Performance

Revenue Growth by Segment

Overall revenue declined 22.22% in FY2025 to INR 228.32 Cr from INR 293.54 Cr in FY2024. The Machine Tools Division saw healthy growth in H1 FY2025 but was derailed by sanctions in H2. H1 FY2026 revenue further moderated to INR 98.48 Cr, a 28.55% decline compared to INR 137.84 Cr in H1 FY2025.

Geographic Revenue Split

The company exports to over 7 countries including Russia, Italy, the US, Bahrain, and Turkey. Specific percentage split per region is not disclosed, but international operations were severely impacted by the inability to enter foreign currency transactions since October 30, 2024.

Profitability Margins

Net Profit (PAT) fell sharply by 96.12% to INR 0.54 Cr in FY2025 from INR 13.85 Cr in FY2024. PAT margin plummeted from 4.72% to 0.24% due to higher depreciation and finance costs. Gross margins are exposed to raw material price fluctuations with a time lag in passing costs to customers.

EBITDA Margin

EBITDA margin decreased from 13.88% in FY2024 to 12.51% in FY2025. This 137 bps compression was driven by a decline in the scale of operations while fixed costs remained relatively unchanged.

Capital Expenditure

Promoters infused INR 15.56 Cr in FY2025 through the conversion of warrants into equity to bolster liquidity. No major debt-funded capital expenditure is planned for the near term to maintain the financial risk profile.

Credit Rating & Borrowing

CARE downgraded long-term facilities to CARE BBB-; Stable from CARE BBB; Negative and short-term facilities to CARE A3 from CARE A3+. Acuite placed ratings under 'Rating watch with Negative Implications' due to OFAC sanctions.

⚙️ Operational Drivers

Raw Materials

Electronic components (specifically noted as disrupted by sanctions), steel, and castings for machine tool manufacturing. Specific percentage of total cost for each is not disclosed.

Import Sources

Not disclosed in available documents, though disruption occurred in the supply of electronic components from a key international supplier due to OFAC sanctions.

Key Suppliers

Not disclosed in available documents; however, a 'key supplier' of electronic components suspended operations with the company following the October 2024 sanctions.

Capacity Expansion

Operates 6 manufacturing units across Hyderabad and Pune. While specific MT/unit capacity is not disclosed, the company is focusing on harnessing expanded capacities in the Defence Division to introduce new product lines.

Raw Material Costs

Raw material costs are a significant portion of the cost structure; margins are exposed to price fluctuations because the order-based nature of operations creates a time lag in adjusting final product prices.

Manufacturing Efficiency

Manufacturing efficiency is supported by a workforce of 651+ employees and investments in training to ensure they are adept with latest technologies. Specific utilization % is not disclosed.

📈 Strategic Growth

Expected Growth Rate

Not disclosed in available documents

Growth Strategy

Growth is targeted through the Defence Division, where LML is the first private Indian company to supply small arms to elite forces. Strategy includes expanding geographic reach, entering new territories for machine tools, and diversifying into the forgings segment with new orders from customers in Pune.

Products & Services

Cam & Crank Borers, Fine Borers, Finish Milling Machines, General Purpose Machines, Special Purpose Machines, and small arms (weapons) for the Indian Army, NSG, and BSF.

Brand Portfolio

Lokesh Machines Limited

New Products/Services

Small arms and precision assemblies for MMG weapons for the Indian Army; high-value machines added to the product range to improve average sales value and margins.

Market Expansion

Expanding into new domestic territories and international markets such as Russia and Italy, though currently constrained by sanctions.

Market Share & Ranking

Ranks among India's top five machine tool manufacturers; holds a leading position in Cam & Crank Borers, Fine Borers, and Finish Milling Machines.

Strategic Alliances

Collaborating with a US-based law firm for regulatory clearance and exploring forge work opportunities with other industry players to mitigate revenue loss.

🌍 External Factors

Industry Trends

The machine tool market is growing due to demand in aerospace, defence, and infrastructure. LML is positioning itself by shifting from pure automotive focus to indigenous defence manufacturing.

Competitive Landscape

Faces intense competition in the machine tool industry; competing with both domestic players and international manufacturers.

Competitive Moat

Moat is built on a 40-year legacy, top 5 market position in specific machine categories, and a first-mover advantage as a private sector small arms supplier to the Indian military.

Macro Economic Sensitivity

Highly sensitive to the cyclical nature of the auto-component industry and macroeconomic forces affecting machine tool demand.

Consumer Behavior

Shift toward indigenous 'Make in India' products in the defence sector is positively affecting demand for LML's new weapon systems.

Geopolitical Risks

Significant risk from US Department of Treasury sanctions (OFAC), which has led to a decline in operating income and restricted access to international financial systems.

⚖️ Regulatory & Governance

Industry Regulations

Subject to Ministry of Home Affairs (MHA) approvals for defence manufacturing and US OFAC regulations which currently restrict international trade.

Environmental Compliance

Investing in Sewage Treatment Plants (STPs) to recycle wastewater and increasing green cover at manufacturing locations in Hyderabad and Pune.

Legal Contingencies

Application pending before the Office of Foreign Assets Control (OFAC), U.S. Department of Treasury, for removal from the sanctions list. The company is also representing to stock exchanges for a waiver of penalties related to independent director vacancies.

⚠️ Risk Analysis

Key Uncertainties

The primary uncertainty is the timeline for removal from the OFAC sanctions list; continued inclusion will likely keep the scale of operations subdued. Potential impact is a continued 20-30% revenue suppression.

Geographic Concentration Risk

Manufacturing is concentrated in Hyderabad and Pune; export revenue is at risk due to current trade restrictions.

Third Party Dependencies

High dependency on a key supplier for electronic components, which caused production disruptions when the supplier halted shipments due to sanctions.

Technology Obsolescence Risk

Risk of falling behind in precision machining; mitigated by continuous investment in workforce training and new product development in the defence sector.

Credit & Counterparty Risk

Adequate liquidity with net cash accruals of INR 14.41 Cr against maturing debt of INR 8.86 Cr. Receivables quality is supported by established relations with government defence agencies and top-tier industrial clients.