LGBL acquired Fine Blanking technology in Mid ‘80s for manufacturing Chain plates. It further extended its fine blanking division as a separate manufacturing during the late ‘90s, to cater to high OEM demands for Fine Blanked components. Today, LGBL is a leading Fine Blanking Manufacturer having many Fine Blanking Presses in operation.

The company has 17 chain manufacturing plants, all ISO 9001 certified by Underwriters Laboratories Inc., USA. Three of the manufacturing f acilities along with the central functions have been registered to ISO/TS 16949 by UL, USA.

LGB is also evolvilng itself to become a Metal Forming company concentrating on Hot, Warm & Cold forging, Blanking, Fine blanking & Precision machined parts.

March 2016 quarter results

Sales grew 4% to Rs 278.28 crore for quarter ended March 2016.

OPM fell 20 basis points to 11.2% which saw OP go up 3% to Rs 31.28 crore.

Other income jumped 174% to Rs 1.94 crore and interest cost fell 5% to Rs 3.71 crore. As depreciation jumped 30% to Rs 11.81 crore, PBT fell 3% to Rs 17.70 crore. As provision for taxation fell 60% to Rs 2.04 crore, net profit grew 20% Rs 15.66 crore.

FY 2016 results

In FY 2016, sales grew 4% to Rs 1090.10 crore.

OPM fell 80 basis points to 11.5% which saw OP fall 3% to Rs 125.78 crore.

Other income grew 82% to Rs 4.17 crore and interest cost was up 1% to Rs 16.48 crore. As depreciation grew 15% to Rs 43.09 crore, PBT fell 10% to Rs 70.37 crore.

EO gains were NIL against Rs 6.60. Thus PBT after EO fell 17% to Rs 70.37 crore.

As provision for taxation fell 37% to Rs 12.92 crore, net profit fell 11% Rs 57.45 crore.

Segment results

For the quarter, sales from the Transmission Division grew 5% to Rs 213.75 crore and accounted for 77% of total. PBIT from the same fell 5% to Rs 17.12 crore and accounted for 80% of total.

For the quarter, sales from the Metal Forming Division grew 1% to Rs 48.56 crore and accounted for 17% of total. PBIT from the same went down 9% to Rs 5.70 crore and accounted for 27% of total.

PBIT of Others stood at a loss of Rs 1.41 crore against a loss of Rs 2.19 crore and accounted for -7% of total.

In FY 2016, sales from the Transmission Division grew 7% to Rs 859.47 crore and accounted for 79% of total. PBIT from the same fell 12% to Rs 68.81 crore and accounted for 79% of total.

In FY 2016, sales from the Metal Forming Division fell 2% to Rs 180.91 crore and accounted for 17% of total. PBIT from the same fell 22% to Rs 18.14 crore and accounted for 21% of total.

PBIT of Others stood at a loss of Rs 10 lakh against a loss of Rs 6.66 crore and accounted for 0% of total.

Consolidated FY 2016 results

In FY 2016, on consolidated basis, sales grew 3% to Rs 1205.30 crore.

OPM fell 70 basis points to 11.4% which saw OP fall 3% to Rs 137.68 crore.

Other income grew 79% to Rs 3.92 crore and interest cost was up 1% to Rs 17.89 crore. As depreciation grew 16% to Rs 45.93 crore, PBT fell 11% to Rs 77.78 crore.

EO gains were NIL against Rs 6.61. Thus PBT after EO fell 17% to Rs 77.78 crore.

As provision for taxation fell 37% to Rs 12.92 crore, PAT fell 12% Rs 64.86 crore.

After providing for minority interest and share of profit/loss of associate companies, net profit fell 11% to Rs 63.50 crore.

Dominant market share

The company has around 70% market share in the OEM chains segment and around 50% market share in the replacement segment.

The company's chain manufacturing plants are all ISO 9001 certified by Underwriters Laboratories Inc., USA. Three of the manufacturing facilities along with the central functions have been registered to ISO/TS 16949 by UL, USA.

The technology is the entry barrier in this business as the chains are precision components. As the vehicles become more and more sleek and powerful, chain quality has to improve. Strong reverse engineering department enables the company in introducing new products. ROLON brand of the company enjoys premium in the market.

Valuation

The stock trades at Rs 470