By Punit Jain - Equity Research Analyst and Founder, JainMatrix Investments
Date: 17th Oct 2016; CMP: Rs 677
Industry: PSU, diversified; Small Cap with Mkt Cap 1,980 crores
Advice: BUY with a target price of Rs 1,057 by Mar 2019, a 56% upside
Balmer Lawrie & Co is a diversified Indian PSU firm into Travel and Tourism, logistics, Industrial packaging, greases, lubricants and Leather chemicals. In each of these areas it occupies good niches. The FY16 revenues were Rs 3,229 cr. and profits 179 cr. The Revenues, EBITDA and Profits of BLC are up by 7%, 6.8% and 7.3% CAGR over 7 years. The balance sheet is strong and RoCE is over 21%. Investors have got a return of 34% CAGR over 8 years.
Why Buy Now:
It has been restructuring and strengthening operations by exiting weak segments and undertaking investments in logistics, warehouses, distribution, manufacturing and lubricants. Cash with the firm will be deployed very productively over 2-3 years.
The share price has fallen 7% from a recent high of Rs 748. This gives investors an opportunity to enter at lower prices.
The reserves & cash on balance sheet are high (Rs 560/sh.), so BLC operations are available for Rs 117. Buy with a target price of Rs 1,057 by Mar 2019, a 56% upside from current price levels.
The rest of this report is available on JainMatrix Investments website.
JainMatrix Investments had reported a Buy on Balmer Lawrie in Nov-2013 at a market price of Rs 306. Since then, the stock is up 121% in 3 years. See link – Balmer Lawrie – A Steady Boat. We continue to be positive.