The textiles industry may not be in the best of health, but textile machinery company Lakshmi Machine Works does not seem to be facing any slowdown in demand.

The company’s top line increased by 42 per cent in FY07 to Rs 1854 crore. This growth was led by volumes as the company has not hiked its product price increase during the year.

Though raw material costs went up over 230 points y-o-y, the company managed to control staff costs and other expenditure, which resulted in operating profit margin rising 15 basis points y-o-y to 15.6 per cent.

Though the company also has a machine tools and foundry segment, nearly 90 per cent of its top line comes from textile machines, where it has over 50 per cent market share. In this business, it manufactured 2.3 million spindles, which will go up to 3.5 million spindles this year.

It has a healthy order-book at Rs 5,350 crore and even if the company does not effect a price hike, higher volumes is expected to lead to a 40 per cent growth in FY08.

Its machine tools division, which manufactures CNC machines, and the foundry division is expected to grow at 30 per cent this year. The stock trades at about 12 times estimated FY08 earnings and should be an outperformer.