Link to 14-Page Detailed Research Note on the company -- http://www.scribd.com/doc/86996241
Views are invited on LG Balakrishnan & Bros Ltd. [ NSE LGBBROSLTD ; BSE 500250 ], India's Largest Manufacturer of Chains/Sprockets enjoying 65 % Marketshare in OEM Market & 50 % Marketshare in Replacement Market and growing at 25 % + p.a. since last two years with a CAGR of past 20 Years at 16.12 % generating RoE of 26 % + & RoCE of 22 % +.
Strong Relationships with OEM clients like Honda Motorcycles ( 70 % requirement catered by the company ), Bajaj Auto ( 65 % requirement catered by the company ), TVS ( 60 % requirement catered by the company), Hero MotoCorp, Yamaha, Harley Davidson, BMW, Ashok Leyland, ZF & Eaton ; Past 2 Decades' Track-Record of not only maintaining but infact enhancing Marketshare with strong focus on R&D ; Exceptional precedents in Minority Shareholders' Wealth Creation with 4 Bonus Issues ( 76.6 % of present paid-up equity capital because of bonus issues ) and Consistent High Dividend Payment every year since last 30 Years; as also Compelling Valuations with MarketCap at just INR 243 cr. v/s FY12e Revenues of INR 910 cr. and FY13e Revenues of INR 1055 cr. ; P/E multiple at 5.29 v/s historical average at 6.95 ; and Dividend Yield at 3.87 % on FY12e, are some of the factors necessitating a closer look at the company.
Included in the attached Research Note is detailed segmentation of Indian Chains/Sprockets Market, Expected Replacement Time for Two Wheeler Units sold in last 8 years from FY05 till 11'Months'FY12, Assessment of Company's Sales Growth v/s Industry Growth over last 8 years as well as Assessment of Debt Profile of the Company over last 20 years.
Please feel free to share your candid views on the company and get back to me in case of any query.
Rgds.
Contents of this Note :
Glimpse at Financial Parameters & Positioning of the Company
( LG Balakrishnan & Bros Ltd. - Mcap Rs. 243.04 cr. with FY12e Revenues of Rs. 910 cr. ) Page 3-3
Why it Deserves to be a Part of One's Core Portfolio :
Indian Chains/Sprockets Market -- OEM & Replacement
( Exponential Growth in Replacement Market because
End-of-Life approaching for Chains )
Two Wheeler Units Sold in Last 8 Fiscals &
Their Expected Replacement Time
( Data Given from FY05 till 11'Months'FY12 )
Positioning of LGB in OEM Market
( ~65 % Marketshare )
OEM Sales Growth v/s LGB's Sales Growth since last 8 Years
( Comparision provided from FY04 till 9'Months'FY12 )
Positioning of LGB in Replacement Market
( ~50 % Marketshare )
Industry Sales Growth v/s LGB's Replacement & Exports Growth
Peer Sales Growth v/s LGB's Sales Growth
Fine Blanking Segment
( Largest in India )
Recent Significant Order-wins in Fine Blanking Segment
( Ashok Leyland, Daimler, ZF & Eaton )
Minority Shareholders' Wealth Creation Assessment
( 4 Bonus Issues
& Consistent High Dividend Payment since last 30 Years )
Debt Profile Assessment of Past 20 Years
( CAGR of Debt v/s Revenue & EBITDA for past 20 Years,
10 Years & 3 Years )
Valuation Commanded by Peer & LGB
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Page 9-9
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Page 12-13
Page 13-14
Link to 14-Page Detailed Research Note on the company -- http://www.scribd.com/doc/86996241
Views are invited on LG Balakrishnan & Bros Ltd. [ NSE LGBBROSLTD ; BSE 500250 ], India's Largest Manufacturer of Chains/Sprockets enjoying 65 % Marketshare in OEM Market & 50 % Marketshare in Replacement Market and growing at 25 % + p.a. since last two years with a CAGR of past 20 Years at 16.12 % generating RoE of 26 % + & RoCE of 22 % +.
Strong Relationships with OEM clients like Honda Motorcycles ( 70 % requirement catered by the company ), Bajaj Auto ( 65 % requirement catered by the company ), TVS ( 60 % requirement catered by the company), Hero MotoCorp, Yamaha, Harley Davidson, BMW, Ashok Leyland, ZF & Eaton ; Past 2 Decades' Track-Record of not only maintaining but infact enhancing Marketshare with strong focus on R&D ; Exceptional precedents in Minority Shareholders' Wealth Creation with 4 Bonus Issues ( 76.6 % of present paid-up equity capital because of bonus issues ) and Consistent High Dividend Payment every year since last 30 Years; as also Compelling Valuations with MarketCap at just INR 243 cr. v/s FY12e Revenues of INR 910 cr. and FY13e Revenues of INR 1055 cr. ; P/E multiple at 5.29 v/s historical average at 6.95 ; and Dividend Yield at 3.87 % on FY12e, are some of the factors necessitating a closer look at the company.
Included in the attached Research Note is detailed segmentation of Indian Chains/Sprockets Market, Expected Replacement Time for Two Wheeler Units sold in last 8 years from FY05 till 11'Months'FY12, Assessment of Company's Sales Growth v/s Industry Growth over last 8 years as well as Assessment of Debt Profile of the Company over last 20 years.
Please feel free to share your candid views on the company and get back to me in case of any query.
Rgds.
Contents of this Note :
Glimpse at Financial Parameters & Positioning of the Company
( LG Balakrishnan & Bros Ltd. - Mcap Rs. 243.04 cr. with FY12e Revenues of Rs. 910 cr. ) Page 3-3
Why it Deserves to be a Part of One's Core Portfolio :
Indian Chains/Sprockets Market -- OEM & Replacement
( Exponential Growth in Replacement Market because
End-of-Life approaching for Chains )
Two Wheeler Units Sold in Last 8 Fiscals &
Their Expected Replacement Time
( Data Given from FY05 till 11'Months'FY12 )
Positioning of LGB in OEM Market
( ~65 % Marketshare )
OEM Sales Growth v/s LGB's Sales Growth since last 8 Years
( Comparision provided from FY04 till 9'Months'FY12 )
Positioning of LGB in Replacement Market
( ~50 % Marketshare )
Industry Sales Growth v/s LGB's Replacement & Exports Growth
Peer Sales Growth v/s LGB's Sales Growth
Fine Blanking Segment
( Largest in India )
Recent Significant Order-wins in Fine Blanking Segment
( Ashok Leyland, Daimler, ZF & Eaton )
Minority Shareholders' Wealth Creation Assessment
( 4 Bonus Issues
& Consistent High Dividend Payment since last 30 Years )
Debt Profile Assessment of Past 20 Years
( CAGR of Debt v/s Revenue & EBITDA for past 20 Years,
10 Years & 3 Years )
Valuation Commanded by Peer & LGB
Page 5-7
Page 7-7
Page 7-7
Page 8-8
Page 8-9
Page 9-9
Page 9-9
Page 10-10
Page 10-10
Page 11-11
Page 12-13
Page 13-14
Link to 14-Page Detailed Research Note on the company -- http://www.scribd.com/doc/86996241