LMW Limited — Q2 FY26 earnings call

Call held 6 Nov 2025

Management summary

LMW is navigating a bifurcated recovery; while the core Textile Machinery Division (TMD) continues to struggle with a two-year down-cycle and low utilization (40-45%), the Machine Tool and Advanced Technology (ATC) segments are emerging as structural growth drivers. Management is leveraging the downturn to focus on New Product Development (NPD) and operational efficiency. Growth in the ATC segment is particularly notable, driven by aerospace and defense, though overall margins are currently weighed down by the nascent composites business.

Highlights

  • Q2 Revenue reached ₹790 crores, representing a 15% increase over Q1 FY26 (₹690 crores).

  • H1 FY26 Revenue stood at ₹1,480 crores, a 5% YoY increase from ₹1,412 crores.

  • H1 PBT rose to ₹92 crores from ₹56 crores YoY, though this includes a ₹15 crore one-time profit from asset sales.

  • Textile Machinery Division (TMD) remains in a prolonged down-cycle with capacity utilization at only 40-45%.

  • Machine Tool and Foundry segment revenue grew to ₹555 crores in H1 FY26 from ₹478 crores YoY.

  • Advanced Technology Centre (ATC) reported H1 revenue of ₹97 crores with an order book of approximately ₹300 crores.

  • TMD active order book stands at ₹1,400 crores out of a total order book of ₹2,700 crores.

  • Machine Tool division is operating at a healthy 70% utilization rate.

Concerns

  • Prolonged Textile CapEx Downturn

Key financials

2 periods

Headline

  • Revenue
    ₹790 Cr
    QoQ +15%
  • TMD Active Order Book
    ₹1,400 Cr

H1

  • Revenue
    ₹1,480 Cr
    YoY +5%
  • PBT
    ₹92 Cr
    YoY +64%

What they filed

Q1 FY27: revenue up 24.1%, net profit up 409.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue769 766 804 694 822 +7%758 −1%933 +16%861 +24%
EBITDA32 36 58 14 44 +38%42 +17%70 +21%64 +357%
Net profit24 19 48 11 41 +71%15 −21%64 +33%56 +409%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

Share of H1 Revenue
₹1,528 Cr Total
  • Textile Machinery Division (TMD) ₹876 Cr 57.3%
  • Machine Tool & Foundry ₹555 Cr 36.3%
  • Advanced Technology Centre (ATC) ₹97 Cr 6.3%

Guidance & targets

Capacity

  • ATC Revenue Capacity Capacity · Current Investment Level · High confidence 300 crores
    So, our, my expectation there is we will be able to accommodate up to 300 crores of turnover with what we have got as of now.

    — V. Senthil, CFO

Other

  • ATC Asset Turnover Ratio Other · Ongoing · Medium confidence 1:1.25
    But what we see is it is more of 1:1.25 times of our investment is what we see as a top line.

    — V. Senthil, CFO

Market context

  • Machine Tool Division Margins Margin · at 90-95% utilization · Medium confidence Double-digit
    If we go to 90 to 95%, I think the margins will definitely go up... you will see that definitely the margins would come back to the double-digit margins as what we had in the past.

    — V. Senthil, CFO

Risks & concerns

  • Prolonged Textile CapEx Downturn

    high

    The textile machinery division has been in its longest down-cycle in two years, with current capacity utilization at only 40-45%.

    Management acknowledged

  • Tariff Uncertainty

    medium

    Confusion over import/export tariffs is causing customers to adopt a 'wait-and-watch' approach for new investments.

    Both acknowledged

  • Low Scale in Composites

    medium

    The composite portion of the ATC business is currently dragging down segment margins due to under-utilization of invested capacity.

    Management acknowledged

Areas of evasion (1)

  • Specific future investment figures for ATC beyond the H1 spend.

Q&A highlights

3 direct
Structural shift in Machine Tool and Foundry Direct
It is a very positive long-term structural change within the Indian manufacturing sector... Right from the fact that we call it China plus one or we call it the reason being a lot of PLI schemes have been announced.

Confirms that the non-textile business is not just a cyclical tailwind but a permanent expansion of the addressable market.

Asked by Divyam Doshi

ATC Margin Profile and Composites Drag Direct
Metallics, of course, at an EBITDA level... should be closer to around 19%... The composite portion of the business... is what is actually still not giving us the margins, because we do not have much of a top line for the capacities what we have there.

Reveals that the core aerospace business is highly profitable (19% EBITDA), and overall segment margins will improve as the composites sub-segment scales up.

Asked by Manish Goyal

Textile Industry Utilization vs. CapEx Direct
Even today if you ask for utilization, you will find that most of the large mills are running at 90% plus utilization... But at the same time, the CapEx decisions are not being taken immediately.

Explains the paradox of high mill utilization but low machinery orders, primarily due to thin margins on yarn and uncertainty over government tariffs.

Asked by Jai Unadkad

2 min read 5 chapters

Detailed narrative

Textile Machinery: Surviving the Longest Down-Cycle

The Textile Machinery Division (TMD) is currently enduring a two-year downturn, the longest in recent memory. Revenue for H1 FY26 declined 8% YoY to ₹876 crores, and the division is operating at a meager 40-45% capacity utilization. Despite large mills running at 90%+ utilization, thin margins on yarn and uncertainty regarding government tariffs have stalled fresh CapEx. Management is maintaining a 5-day work week to manage costs while focusing on new product launches like the 1.28-meter card and 2400 spindle ring frame to be ready for the eventual cycle reversal.

Machine Tools: A Structural Growth Engine

The Machine Tool and Foundry segment has emerged as a key earnings driver, with H1 revenue reaching ₹555 crores. Management views this as a structural shift in Indian manufacturing rather than a cyclical tailwind, citing 'China Plus One' strategies and various PLI schemes. The division is operating at 70% utilization, and management expects margins to return to double digits once utilization hits the 90-95% range. New sectors like EMS, defense, and locomotives are providing a diversified and growing addressable market.

ATC: High-Margin Potential Masked by Scale

The Advanced Technology Centre (ATC) reported H1 revenue of ₹97 crores, up from ₹82 crores YoY. While the segment's reported margin is 8.5%, management highlighted that the 'metallics' portion (aerospace/defense) delivers a robust ~19% EBITDA. The overall margin is currently suppressed by the 'composites' business, which is still in the scale-up phase. With a ₹300 crore order book and a target asset turnover of 1.25x on its ₹250 crore investment, the ATC segment is positioned for significant margin expansion as it reaches its ₹300 crore revenue capacity.

International Footprint and Order Book Resilience

LMW's international operations showed strong growth, with LMW Global (Dubai) turnover rising to ₹71 crores in H1 from ₹49 crores YoY, and LMW China more than doubling to ₹41 crores. The company maintains a total order book of ₹2,700 crores in the textile segment, though only ₹1,400 crores is currently 'active.' The export strategy is being sharpened through the Dubai entity to provide specific attention to markets like Egypt, Indonesia, and Bangladesh, which are showing early signs of revival.

Innovation as a Competitive Edge

During the recent ITMA Asia exhibition, LMW showcased several new technologies, including the LC9S carding machine and LDF6 draw frame. A key focus is 'SpinConnect' software, which enables IoT connectivity and machine learning for self-adjusting processes. Management believes that reducing the 'total cost of operations' for customers through automation (like robotic auto piecing) and energy efficiency is their primary 'right to win' as the global textile market eventually normalizes.

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