View Full Version : LG Balakrishnan & Bros Ltd (NSE:LGBBROS) (BSE:500250)

08-03-2015, 07:14 AM
L.G. Balakrishnan & Bros Limited is an India-based company engaged in the manufacturing of chains, sprockets and metal formed parts for automotive applications. The company has 17 chain manufacturing plants. Its business segments include transmission, metal forming and others. Its transmission products include chains, sprockets, tensioners, belts and brake shoe. It also offers metal forming products consisting of fine blanking for precision sheet metal parts, machined components and wire drawing products for internal use as well as for other chain manufacturing plants, spring steel suppliers and umbrella manufacturers. The Company’s products are marketed under the Rolon brand. The Company has manufacturing units in Tamil Nadu, Maharashtra, Uttarakhand, Karnataka and Haryana. The Company has two subsidiaries: BCW V Tech India Private Limited and LGB USA INC.

Official Website: www.lgb.co.in

08-03-2015, 07:15 AM
For 1QFY2016, LG Balakrishnan & Bros (LGBBL)’s standalone top-line and bottom-line have come in below our estimates. The standalone top-line growth was subdued mainly due to lower growth in the Transmission segment, which contributes by ~76% to the company’s total standalone revenue. Further, the Other segment reported a decline on the sales front. On the bottom-line (standalone) front, the company unperformed due to subdued sales, poor operating performance and a higher tax rate. Top-line growth declined by ~1%: The standalone top-line declined by ~1% yoy to ~Rs247cr. The Transmission segment reported a lower-than-expected growth of ~2% yoy to Rs194cr. Further, the Metal forming segment reported a decline of ~6% yoy to ~Rs42cr and the company’s Other segment reported a decline of 27% yoy. Poor operating performance and higher tax rate mar profitability: For the quarter, the company’s bottom-line came in at ~Rs9cr, down ~41% yoy, owing to underperformance on the operating front and due to a higher tax rate (up 245bp yoy). Outlook and valuation: LGBBL is a market leader in two-wheeler automotive chains with ~70% market share in the OEM segment. The company has been reporting lower growth in earnings since the last three quarters, which is mainly due to overall slowdown in the two-wheeler industry. The two-wheeler industry has been impacted mainly due to rural slowdown. However, sales are expected to rebound in 2HFY2016 on expectations of a normal monsoon which will boost crop output, thus leading to revival in rural demand. The company’s volume growth in the automotive chains segment is expected to improve over FY2015-17E with its key clients like HMCL, HMSI, Yamaha, TVS Motor and others having plans of capacity expansion and with they launching new models. We have a Neutral rating on the stock.

Source: http://www.angelbroking.com/