Jan 11, 2017 01:42 PM IST | Source: CNBC-TV18

Optimistic on Balmer Lawrie Invest, target Rs 550: Chokkalingam

G Chokkalingam, Founder & Managing Director Of Equinomics Research & Advisory has a very optimistic view on Balmer Lawrie Investment with a target price of Rs 550.

G Chokkalingam, Founder & Managing Director of Equinomics Research & Advisory told CNBC-TV18, "With 100 percent conviction I would present three ideas - one is Balmer Lawrie Investments. We saw last week that the government proposing a strategic sale of Balmer and willing to seat on minority stake in Balmer, that gave me lot of confidence in this company because if government could strategic sale of Balmer which is supplying products to even defence, obviously there is no reason for the government to hold on to commercial venture like Balmer Lawrie Company."

"Balmer Lawrie Investments have given commitment to RBI that it will divest holding in Balmer Lawrie and wind up the holding company," he said. 

"It is available at around 50 percent discount to value of investments it holds in Balmer Lawrie Company. Very interestingly, when government holds around 60 percent in Balmer Lawrie Investment, Balmer Lawrie Investment holds only around 62 percent in Balmer Lawrie Company. Which means effective control over Balmer Lawrie Company is only around 37 percent. So, there is more reason for government to divest. If they divest than the stock can double otherwise according to me consecutively it can give Rs 550 target price." 

"It gives very good dividend yield which is also sitting on some cash. It was purely promoted to be holding company for a temporary period. Somehow, the government have ignored and now the time has come for the government to divest, I believe. If they divest Balmer Lawrie Company which is a subsidiary of Balmer Lawrie Investments, then Balmer Lawrie Investment can double from this level because it has about a 50 percent discount to value of investments it holds. That is why I remain very optimistic. I formally believe that it can give at least Rs 550 as a target."
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