At a Glance
Lakshmi Electrical Control Systems Ltd (LECS) just dropped Q1 FY26 numbers that look like they were written by an accountant on sedatives. Revenue ₹52.4 Cr, PAT ₹0.57 Cr, EPS ₹2.32, and an operating margin that barely twitched at 0.82%. The company is almost debt-free and trades below book value (yay?), but also flaunts a P/E of 75 with ROE lower than your bank’s FD rate. If this isn’t market irony, what is?
Introduction
LECS is part of the Lakshmi Group and mainly makes control panels for textile machinery, feeding its big brother Lakshmi Machine Works. It also dabbles in plastic components, trying to stay relevant in the auto and engineering industries. Once upon a time, it had Swiss tech (Sprecher+Schuh) to flex, but today it’s mostly surviving on legacy relationships and hope.
The last year hasn’t been kind: margins collapsed, profits tanked, and the stock price lost 40%. Yet, the market still values it at ₹980 a pop, maybe out of nostalgia or because investors love a good underdog.
Business Model (WTF Do They Even Do?)
The company’s bread and butter is control panels for textile machines – a market where it has a captive customer (LMW). The side hustle? Plastic components for automobiles. It’s a B2B supplier, meaning its fate is tied to the cyclical moods of its customers. When LMW sneezes, LECS catches pneumonia.
Revenue sources are narrow, dependence on a single client is high, and diversification is more of a buzzword here than reality.
Financials Overview
Q1 FY26 Snapshot
- Revenue: ₹52.4 Cr (YoY -43%, QoQ -10%)
- EBITDA: ₹0.43 Cr (margin 0.82%)
- PAT: ₹0.57 Cr (net margin 1.1%)
- EPS: ₹2.32 (annualized ₹9.3 → P/E = 980 / 9.3 ≈ 105, not 75!)
Commentary: Revenue is in free fall, margins are crawling on the floor, and profits are barely alive. Other income (₹1.2 Cr) is saving the day, meaning the business isn’t profitable on its own.
Valuation
Three ways to justify (or roast) the price:
- P/E Method:
Annualized EPS ₹9.3 × sector multiple 15 → Fair Value ≈ ₹140. - EV/EBITDA:
EV ≈ ₹241 Cr (no debt). EBITDA (annualized) ≈ ₹1.7 Cr.
EV/EBITDA ≈ 140x → Fair Value ≈ ₹100. - DCF:
Assume annual cash flow ₹3 Cr, WACC 10%, terminal growth 2%.
PV ≈ ₹40 Cr → Per share ≈ ₹160.
Fair Value Range: ₹100 – ₹160. Current price ₹980 = bubble territory.
What’s Cooking – News, Triggers, Drama
- No major capex, no big orders, no turnaround news.
- Only trigger: LMW increasing orders (unlikely soon).
- Dividend continues but too tiny to matter.
Balance Sheet
| ₹ Cr | FY25 |
|---|---|
| Assets | 353 |
| Liabilities | 353 |
| Net Worth | 285 |
| Borrowings | 10 |
Auditor Roast: Almost debt-free, but reserves are barely growing. Assets are sitting idle, just like growth prospects.
Cash Flow – Sab Number Game Hai
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Ops | 7 | 11 | 5 |
| Investing | -1 | -8 | -5 |
| Financing | -6 | -3 | -1 |
Remarks: Operations barely generate cash. Capex minimal. Financing cash outflows mostly dividends – generous for a struggling company.
Ratios – Sexy or Stressy?
| Metric | Value |
|---|---|
| ROE | 1.3% |
| ROCE | 2.3% |
| P/E | 75 |
| PAT Margin | 1.1% |
| D/E | 0.03 |
Remarks: Financially stressy, valuation-wise delusional.
P&L Breakdown – Show Me the Money
| ₹ Cr | FY23 | FY24 | FY25 |
|---|---|---|---|
| Revenue | 361 | 338 | 212 |
| EBITDA | 27 | 16 | 5 |
| PAT | 20 | 14 | 3 |
Remarks: Revenue halved in 2 years, profits down 85%. This is not a growth story; it’s a survival tale.
Peer Comparison
| Name | Revenue (₹ Cr) | PAT (₹ Cr) | P/E |
|---|---|---|---|
| Waaree Energies | 15,461 | 2,221 | 39 |
| Premier Energies | 6,682 | 1,047 | 45 |
| Genus Power | 2,442 | 293 | 37 |
| Lakshmi Electrical | 213 | 3 | 75 |
Remarks: Peers are growing, LECS is shrinking. Yet it trades at the highest P/E. Investors clearly love pain.
Miscellaneous – Shareholding, Promoters
- Promoter Holding: 36% (low, and not inspiring).
- Public Holding: 64%.
- Promoter Moves: None.
- Buzz: AGM notices, but no strategic updates.
EduInvesting Verdict™
Lakshmi Electrical Control Systems is a classic value trap disguised as a heritage stock. It’s debt-free and trades below book value, which lures unsuspecting value investors. But profitability is evaporating, revenues are declining, and dependence on a single client is risky.
SWOT Quickie:
- Strength: Debt-free, captive client.
- Weakness: Falling revenues, razor-thin margins.
- Opportunity: New client diversification.
- Threat: Any slowdown at LMW = doom.
Final Word: At ₹980, this stock is priced for a comeback that isn’t happening. Dividend is okay, but growth? Dead. Only suitable for collectors of niche legacy companies.
Written by EduInvesting Team | 31 July 2025
SEO Tags: Lakshmi Electrical Control Systems, Capital Goods, Smallcap Analysis
