Balmer Lawrie and Co(523319). : A Blue chip multi business company available at attractive levels of Rs 560-Rs 575 Buy at current range one year Target Rs700

 

About Company: Balmer Lawrie is a Mini-Ratna I Public Sector Enterprise under the Ministry of Petroleum and Natural Gas. Along with its six Joint Ventures in India and abroad and a wholly owned subsidiary in the UK, today it is a much-respected transnational diversified conglomerate with presence in both manufacturing and service sectors. Balmer Lawrie is a market leader in Steel Barrels, Industrial Greases & Specialty Lubricants, Corporate Travel and Logistics

six business units –

1  1.    Travel & Vacations:  (45% of Total turnover)>>> balmerlawrietravel.com

2  2.     Industrial Packaging (18% Of Total Turnover)

3  3.     Greases & Lubricants(14% Of Total Turnover)

4  4.     Logistics (19% Of Total Turnover)

5  5.       Refinery & Oil Field Services.(2%).

6  6.        Leather Chemicals (2%)

Performance of Company: Company has maintained profitability in last 5 years and consistently paying dividend for last five years.

	2016-E	2015	2014	2013	2012	2011
Revenue(Crores)	2900	2,740.37	2,626.63	2,580.68	2,284.07	2,018.99
Other Income	77	75.4	80.71	58.92	53.1	30.89
Total Income	2977	2,815.77	2,707.34	2,639.60	2,337.17	2,049.88
Expenditure	-2650.00	-2,573.92	-2,462.13	-2,395.23	-2,127.03	-1,853.72
Interest	-3.5	-5.07	-6	-4.22	-4.69	-2.99
PBDT	323.5	236.78	239.21	240.15	205.45	193.17
Depreciation	-32	-26.34	-19.59	-16.63	-15.18	-12.13
PBT	291.5	210.44	219.62	223.52	190.27	181.04
Tax	-87	-63	-62.95	-60.75	-52.2	-59.95
Net Profit	204.5	147.44	156.67	162.77	138.07	121.09
Equity	28.5	28.5	28.5	16.29	16.29	16.29
EPS	71.75	51.73	54.97	99.94	84.78	74.35
OPM %	10%	8.83	9.34	9.47	9.2	9.72
NPM %	7%	5.38	5.96	6.31	6.04	6
Dividend%	200%	180%	180%	176%	280%	260%

As per the above shared performance company has shown very slow revenue growth major factors influencing slower growth could be attributed to the recessionary factors. 

Going forward with improvement in macro economics factors ,stabilizing of crude oil prices at lower levels and increase in demand should help in improving financial performance from hereon.

First quarter performance has seen marginal increase in revenue but margin improvement mainly due to increase in demand for industrial packaging,  increase in export for greases and Lubricant products and increase in logistics business  has resulted in net profit growth of 32%.This could be early signs of revival and improvement in performance.

Based upon the quarterly performance I expect the company to achieve standalone revenue of 2900 crores and 2016 with net profit of 204 crores resulting in EPS of 71-72. If stock continues to command PE multiple of 10 the target of Rs 700 can easily be achieved in 1 year.

Balmer Lawrie at current valuation appears to be a very safe bet for long term investment.Good dividend yield of approx. 4% with scope of appreciation of 25% from current level of Rs 550 which could easily result in 30% returns if we include expected dividend as well.

One can safely invest for long term at current levels in this undervalued stock at CMP(Ref:1-10-2015) of Rs 550