CD Equisearch's research report on L.G.Balakrishnan & Brothers
Helped by barely immodest recovery in metal forming business and stable margins in its transmission business - despite increased volatility in raw material prices - LGB posted 12% growth in revenues to Rs 558.89 crs in Q4 (compared with Rs 499.08 crs in same period last year) followed by 15.8% rise in post tax earnings (adjusted); pretax earnings was propelled by exceptional income of Rs 5.02 crs on account of subsidy received. Galvanized by new product launches, metal forming business reported (probably) its highest ever quarterly margin at 16.2% when compared with reading of 9.3% in the same quarter last fiscal and 12.3% in Q3. Wherefore, its EBIT rose to Rs 18.53 crs in Q4 from Rs 9.19 crs in the same quarter a year ago. Full year reading has been scarcely unimpressive for its EBIT leapt to Rs 60.16 crs from a measly Rs 4.25 crs in FY21.
Weighing odds, we maintain our buy recommendation on the stock with revised target of Rs 682 (previous target: Rs 565) based on 8xFY23 earnings.
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