Buy Balmer Lawrie: Finquest Research

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Buy Balmer Lawrie: Finquest Research

Finquest Research bullish on Balmer Lawrie and Co. Ltd and has maintained buy rating on the stock.

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Finquest Research bullish on Balmer Lawrie and Co . and has maintained buy rating on the stock.

Finquest Research report on Balmer Lawrie and Co. Ltd.

"Balmer Lawrie and Co. Ltd.(BLC), a diversified business conglomerate is mainly engaged in businesses of Industrial packaging, Logistics Management, Greases and Lubricants, Travels and Tours. With its logistics business picking up pace, the company will continue its growth trajectory in future."

Investment Argument

• "With Container Freight Services (CFS) facilities located at key ports and increase in demand for logistic services due to improved foreign trade, the Logistics SBU of BLC, a high margin business, is poised to grow at a robust pace."
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  "With Chennai and Mumbai CFS facilities already functioning at 90-100% capacity and newer capacities becoming operational adjacent to the existing ports in FY2008, we expect the Logistics SBU to be the key profit contributor among all its segments"
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  "BLC is the largest company in steel barrel manufacturing, greases manufacturing, Travel business and Leather Chemicals. These businesses along with providing stable growth also mitigate the risk of over exposure to a particular segment."

l    "Over the last 5 years BLC's has maintained its dividend payout ratio at around 32% and we expect the same to continue in future. Hence, in FY2007E and FY2008E we expect BLC to reap a dividend yield between 3.6-4.1%."

Valuations

"Considering the changing dynamics, we expect a re-rating of the stock. At CMP of Rs 425, the stock trades at a P/E of 7.8x FY2007E and 6.1x FY2008E, and EV/EBIDTA of 5.3x FY2007E and 4.2x FY2008E. We Initiate Coverage on the stock with a 'Buy' recommendation and 12-month Target Price of Rs 630 which translates into annualized returns of 48%."