GEOJIT BNP PARIBAS's research report on LG BalakrishnanThe transmission segment accounting for 80% of the revenue grew by 8.3%in 9MFY16 despite weak OEMs demand at -2.5% YoY. EBITDA margin has been maintained over the last 3yrs. We expect marginal improvement over FY16E-18E to 12.5%. Capacity expansion by major OEM’s to meet their export demand will improves LGB volumes in FY17. Greenfield plant has been commissioned to execute new orders for Bajaj Auto and aftermarket. Currently 60% volume demand comes from Bajaj. We revise downward our Revenue and PAT estimate for FY17E by 10% and 17% respectively. However with decent fundamentals (healthy CFO), good market share and relatively attractive valuation at the CMP we maintain Accumulate rating with a target price of Rs474. Going forward, LGB would improve its volume growth in the chains segment from key clients like Bajaj, HMCL, HMSI, Yamaha and TVS Motor (owing to upcoming capacity expansion plans and new launches). For near term we revise downward our Revenue and PAT estimate for FY17E by 10% and 17% respectively. However with decent fundamentals (healthy CFO), good market share and relatively attractive valuation at the CMP, we maintain our rating as Accumulate with a target price of Rs474.For all recommendations, click here Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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