Lokesh Machines zooms 20% on getting initial license for making small arms

Shares of Lokesh Machines were locked in the 20 per cent upper circuit, and also hit a 52-week high of Rs 185.50 on the BSE in Thursday's intra-day trade; after the company got initial license for manufacturing small arms.

“Intimation has been received from the Ministry of Home Affairs, New Delhi, stating that the Initial License (Form VIJ) for Manufacturing of Small Arms has been granted to Lokesh Machines, subject to payment of applicable fees,” Lokesh Machines said in an exchange filing.

However, the company said it has not yet received a copy of the afore-said license. Upon receiving the license, we will promptly inform the exchange, the company said.

A combined 1.7 million shares had changed hands and there were pending buy orders for around 450,000 shares on the NSE and BSE.

Thus far in the current calendar year 2023, the stock has zoomed 75 per cent, as compared to 3.4 per cent rise in the S&P BSE Sensex.

Lokesh Machines has six manufacturing units with five in Hyderabad and one in Pune with a total installed capacity of 900 General-Purpose Machines (GPM) and 10 Special Purpose Machines (SPM) per annum (reported capacity; however, depending on the size and the type of machine, the capacity may vary).

The company’s operations can be segregated into two divisions namely, machines and components division. The product portfolio consists of machine tools such as CNC Lathes, Vertical Machining Centers, Horizontal Machining Centers, Vertical Turning Centers, Special Purpose Milling Machines, Line Boring Machines and Gun Drilling Machines, among others. As on March 31, 2023, Lokesh Machines has a total order book position of Rs 216.82 crore.

According to CARE Ratings, India machine tools market is expected to grow at a steady CAGR for the forecast period, FY2023-FY2027. Advent of machine tools such as multi-axis and robotic arm is fueling the demand of machine tools in the region.

Growth of oil and gas industry, railway sector and automotive industries is boosting the demand for machine tools market.  Demand for smart functions across various end-user industries for reduced power usage and higher energy efficient machines are creating the demand for machine tools in the region. Rise in demand for heterogeneous material for manufacturing process to facilitate the flexibility in design and optimize the operational and maintenance costs is increasing the demand for advanced machine tools, the rating agency said in its rationale.

The industry which is seeing a meaningful upturn after a long period of sluggish growth is likely to witness a positive momentum on the back of revival in overall economy, improving rural cash flows, and an increasing need for personal mobility. Introduction of schemes like production-linked incentive and vehicle scrappage policy is likely to increase the competitiveness of the Indian automotive industry globally. Also, with the Global Supply Chains in Engineering and Automotive space starting to source from India as a China Derisking strategy, the future augurs well for India, CARE Ratings said.