CARE Equity Research assigns 4/5 on fundamental grade to Balmer Lawrie & Company Ltd

CARE Equity Research assigns a fundamental grade of 4/5 to BLCL. This grade indicates 'Very Good Fundamentals'. BLCL is a Central Public Sector undertaking with a 'Mini Ratna-I' status. It is a diversified, multi-location and multi-product medium-sized company manufacturing steel barrels, greases & lubricants & performance chemicals and carrying out various service-based activities such as logistics management, tours & travels, project engineering & consultancy in oil & infrastructure sector, container freight and tea blending & packaging. It is almost a debt-free company with steady financial performance during the last three years.

Valuation

CARE Equity Research values equity shares of BLCL at Rs.660 per share. The value has been arrived using the Sum of Part valuation methodology. We have valued the BLCL standalone business at historical average one-year forward multiple of 6.7 times and have valued BLCL's stake in Balmer Lawrie - Van Leer Limited (40 per cent stake) and Balmer Lawrie (UAE) LLC (49 per cent stake) at their book value. BLCL's 25 per cent stake in AVI - OIL India Pvt Limited has been valued at 0.6x book value since the company has relatively lower RoE of 8.5%. At the Current Market Price (CMP) of Rs.588 per share as on August 10, 2012, the equity shares of BLCL have been assigned a valuation grade of 4/5, indicating 'Moderate Upside Potential' from the CMP.

Source : Equity Bulls

Keywords