This Is Why Lokesh Machines Limited's (NSE:LOKESHMACH) CEO Compensation Looks Appropriate

Key Insights

• Lokesh Machines to hold its Annual General Meeting on 26th of September
• Salary of ₹6.00m is part of CEO Lokeswara Mullapudi's total remuneration
• The overall pay is comparable to the industry average
• Over the past three years, Lokesh Machines' EPS fell by 18% and over the past three years, the total shareholder return was 61%

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Lokesh Machines Limited (NSE:LOKESHMACH) has exhibited strong share price growth in the past few years. However, its earnings growth has not kept up, suggesting that there may be something amiss. The upcoming AGM on 26th of September may be an opportunity for shareholders to bring up any concerns they may have for the board’s attention. One way that shareholders can influence managerial decisions is through voting on CEO and executive remuneration packages, which studies show could impact company performance. From the data that we gathered, we think that shareholders should hold off on a raise on CEO compensation until performance starts to show some improvement.

Check out our latest analysis for Lokesh Machines

Comparing Lokesh Machines Limited's CEO Compensation With The Industry

According to our data, Lokesh Machines Limited has a market capitalization of ₹3.7b, and paid its CEO total annual compensation worth ₹6.0m over the year to March 2025. This was the same amount the CEO received in the prior year. Notably, the salary of ₹6.0m is the entirety of the CEO compensation.

For comparison, other companies in the Indian Machinery industry with market capitalizations below ₹18b, reported a median total CEO compensation of ₹5.5m. So it looks like Lokesh Machines compensates Lokeswara Mullapudi in line with the median for the industry. Furthermore, Lokeswara Mullapudi directly owns ₹171m worth of shares in the company, implying that they are deeply invested in the company's success.

On an industry level, around 97% of total compensation represents salary and 3% is other remuneration. On a company level, Lokesh Machines prefers to reward its CEO through a salary, opting not to pay Lokeswara Mullapudi through non-salary benefits. If salary is the major component in total compensation, it suggests that the CEO receives a higher fixed proportion of the total compensation, regardless of performance.

A Look at Lokesh Machines Limited's Growth Numbers

Over the last three years, Lokesh Machines Limited has shrunk its earnings per share by 18% per year. Its revenue is down 30% over the previous year.

Few shareholders would be pleased to read that EPS have declined. This is compounded by the fact revenue is actually down on last year. It's hard to argue the company is firing on all cylinders, so shareholders might be averse to high CEO remuneration. Although we don't have analyst forecasts, you might want to assess this data-rich visualization of earnings, revenue and cash flow.

Has Lokesh Machines Limited Been A Good Investment?

Most shareholders would probably be pleased with Lokesh Machines Limited for providing a total return of 61% over three years. This strong performance might mean some shareholders don't mind if the CEO were to be paid more than is normal for a company of its size.

In Summary...

Lokesh Machines rewards its CEO solely through a salary, ignoring non-salary benefits completely. While the return to shareholders does look promising, it's hard to ignore the lack of earnings growth and this makes us question whether these strong returns will continue. The upcoming AGM will provide shareholders the opportunity to revisit the company’s remuneration policies and evaluate if the board’s judgement and decision-making is aligned with that of the company’s shareholders.

CEO compensation is an important area to keep your eyes on, but we've also need to pay attention to other attributes of the company. That's why we did our research, and identified 3 warning signs for Lokesh Machines (of which 2 are potentially serious!) that you should know about in order to have a holistic understanding of the stock.

Important note: Lokesh Machines is an exciting stock, but we understand investors may be looking for an unencumbered balance sheet and blockbuster returns. You might find something better in this list of interesting companies with high ROE and low debt.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.