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Banco Products (India) Ltd Research Report - 16th Dec 2015

Auto Ancillary | Published on Jul 01st 2014

IT

Banco Products (India) (Banco) is among the leading manufacturers of radiators and gaskets in the country with five manufacturing units. In July 2010, the company acquired 51% stake in Lake Cement (a cement manufacturer), a diversification into unrelated business which led to sharp correction in the stock price. In May, 2014, the company exited the cement business at ~52% premium for US$17.7mn and is now expected to use the proceeds for acquisition in auto component related business in Europe which will further strengthen its foothold in global auto component market. Additionally, the commercial vehicle (CV) industry which contributes ~80% to the companys domestic revenue is also witnessing revival, which poses a huge growth potential for the company. On account of growth potential with revival in CV industry and potential acquisition plans, we initiate coverage on the company with a Buy recommendation with a target price of Rs172 on a target PE of 9.0x FY2016E earnings.

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CMP 120
Target Price 172
Investment Period12 Months

Stock Info

MCAP BSE (Rs in Cr)1,397.47
MCAP NSE (Rs in Cr)1,398.18
P/E (x)12.74
EPS (Rs.)15.34
BV (Rs.)73.34
Div Yield (%)2.35
FV (Rs.)2.00
P/BV (x)1.83
EV/Sales (x)1.10
EV/EBITDA (x)13.72

Shareholding Pattern (%)

Promoter68.0
Public & Others27.0
Institution4.0
Foreign1.0
Corporate0.0
Grand Total100.0

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