Shares of this microcap company clocked 5 percent upper circuit after receiving an order from the Indian Army to supply submachine guns. The shares have delivered a multibagger return of 175 percent in one year to its shareholders.
With a market capitalization of Rs. 773 crores, the shares of Lokesh Machines Ltd started Monday’s trading session on a higher note at Rs. 428.80 compared to its previous close of Rs. 409.20. During the trading session, the shares clocked 5 percent upper circuit at Rs. 429.65 apiece.
Such a bullish movement in the share price was observed after the company in an exchange filing announced that they had received an order worth Rs. 42.6 million (Rs. 4.26 crores) from Northern Command, Indian Army, Department of Military Affairs, Ministry of Defence, Government of India for the supply of submachine guns 9×19 mm Machine Pistol (ASMI) with accessories.
Coming onto the company’s financial statements, the revenue decreased by 7 percent from Rs. 86.49 crores during the December quarter to Rs. 80.34 crores in the March quarter. On the other hand, the net profits declined by 8 percent from Rs. 5.11 crores to Rs. 4.69 crores during the same period.
Comparing the same metrics on a YoY basis, the revenue zoomed around 20 percent from Rs. 67 crores during Q4FY23 to Rs. 80.34 crores in Q4FY24. In addition, the net profits surged by 58 percent from Rs. 2.96 crores to Rs. 4.69 crores during the same timeframe.
As of 31 March 2023, the company had an order book of Rs. 216.36 crores, out of which Rs. 93.36 crores of orders were received from the Machine Tools Division and the majority of orders i.e., Rs. 123 crores were received from Auto Components and Defence Division.
Earlier, in collaboration with the Defence Research and Development Organisation (DRDO), Lokesh Machines successfully manufactured India’s first indigenous 9mm machine pistol.
Furthermore, the company has secured a commercial license for small arms manufacturing from the Ministry of Home Affairs and delivered over 100 weapon sets to government agencies.
The company further aims to boost revenue within the Defence Division by harnessing its expanded capacities, introducing new product lines, and capitalising on emerging opportunities in the sector.
Moreover, the company plans to fully utilise its newly increased production capacities to enhance efficiency and meet growing demand.
Due to increasing operating revenue and profits on a YoY basis, the profitability metrics of the company improved with the return on equity (RoE) increasing from 6.08 percent during FY 22-23 to 7.06 percent in FY 23-24, and, the return on capital employed (RoCE) increased from 12.23 percent to 12.42 percent during the same timeframe. Furthermore, the net profit margin increased from 4.02 percent during FY22-23 to 4.71 percent during FY23-24.
Headquartered in Hyderabad, Lokesh Machines was incorporated in 1983. The company is a leading manufacturer of special purpose machines (SPMs) and machine tools, primarily serving the automobile, power generation, and general engineering industries and has forayed into the defence sector.
Written By Vaibhav Patil
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