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LG Balakrishnan: Zooming Ahead

LGBBROSLTD | BSE CODE: 500250 | VOLUME: 1,628 | CMP: Rs 550 | FACE VALUE: Rs 10

LG Balakrishnan is a market leader in two-wheeler automotive chains with around 70 per cent market share in the OEM chains segment and around 50 per cent market share in the replacement segment in India. The two-wheeler industry is showing signs of recovery, both in terms of domestic sales as well as exports. This will lead to recurring business opportunity for auto ancillary companies. Going ahead, the company would improve its volume growth in the automotive chains segment driven by healthy volume growth with key clients like HMCL, HMSI, Yamaha, TVS Motor and others (owing to upcoming capacity expansion plans and new launches). The transmission segment contributes by 74 per cent of the company’s total standalone revenue. Its net profit rose by 26.5 per cent to Rs 51.3 crore and net sales increased by 7.4 per cent to Rs 781 crore in 9M FY15 over 9M FY14. Currently the stock is trading at PE of 13x and EV to EBITDA at 6.5.

Oricon Enterprises: A Well-Diversified Spread

ORICON | BSE CODE: 513121 | VOLUME: 7,71,916 | CMP: Rs 54 | FACE VALUE: Rs 2

Oricon Enterprises has a consolidated turnover of nearly Rs 1,000 crore and is engaged through its subsidiaries in the business of marine logistics, packaging, automobile distribution and petrochemicals. Oricon Enterprises’ consolidated net profit rose by 40.6 per cent to Rs 20.8 crore on 21.6 per cent rise in net sales to Rs 813 crore in 9M FY15 over 9M FY14. It has acquired 70 per cent shares of Oriental Containers from its joint venture partners OC Holding Ltd, Mauritius, for Rs 105 crore. The acquisition would be funded through the company’s internal resources and borrowings including interest free loans from directors. Oriental Containers is the largest manufacturer of a wide range of closures, which includes crowns, plastic beverages and water closures, ROPP Caps, chamfered caps, aluminium collapsible tubes, and other packaging products. In the December 2014 quarter the promoters’ holdings increased from 62.51 to 74.28 per cent due to allotment of 5.45 lakh equity shares with 1.09 lakh of compulsory convertible preference shares.