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

June 2017 quarter results

Sales grew 9% to Rs 315.00 crore for quarter ended June 2017.

OPM grew 60 basis points to 10.1% which saw OP go up 16% to Rs 31.82 crore.

Other income fell 22% to Rs 67 lakh crore and interest cost fell 26% to Rs 2.78 crore. As depreciation grew 9% to Rs 12.70 crore, PBT rose 32% to Rs 17.01 crore. As provision for taxation jumped 58% to Rs 5.89 crore (tax incidence grew from 29.0% to 34.6%), net profit grew 22% Rs 11.13 crore.

FY 2017 results

For FY 2017, sales grew 7% to Rs 1171.59 crore.

OPM grew 100 basis points to 12.5% which saw OP go up 17% to Rs 147.01 crore.

Other income grew 3% to Rs 4.29 crore and interest cost fell 15% to Rs 14.00 crore. As depreciation grew 14% to Rs 49.23 crore, PBT rose 25% to Rs 88.08 crore. As provision for taxation jumped 105% to Rs 26.52 crore (tax incidence grew from 18.4% to 30.1%), net profit grew 7% Rs 61.55 crore.

Standalone segment results

For the quarter, sales from the Transmission Division grew 10% to Rs 245.51 crore and accounted for 78% of total. PBIT from the same grew 40% to Rs 16.90 crore and accounted for 82% of total.

For the quarter, sales from the Metal Forming Division grew 8% to Rs 55.77 crore and accounted for 18% of total. PBIT from the same fell 39% to Rs 3.01 crore and accounted for 15% of total.

For the quarter, sales from Others Division grew 7% to Rs 13.73 crore and accounted for 4% of total. PBIT fell 10% to Rs 62 lakh and accounted for 3% of total.

In FY 2017, sales from the Transmission Division grew 7% to Rs 919.78 crore and accounted for 79% of total. PBIT from the same grew 21% to Rs 84.13 crore and accounted for 80% of total.

In FY 2017, sales from the Metal Forming Division grew 11% to Rs 201.26 crore and accounted for 17% of total. PBIT from the same stagnated at Rs 18.10 crore and accounted for 17% of total.

In FY 2017, sales from Others Division grew 2% to Rs 50.55 crore and accounted for 4% of total. PBIT fell 21% to Rs 2.70 crore and accounted for 3% of total.

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.

Well geared for the future

It has invested heavily in the last four years and an amount of almost Rs 285.03 crore has been spent in upgrading its existing facilities as well as in expanding capacities.

The company is geared for the future and is confident that it shall continue to march ahead.

Valuation

The stock trades at Rs 752.