Banco Products (India) which is an auto ancillary company manufacturing multi layered gaskets, steel fibre composite gaskets and copper gaskets etc posted strong results for June 2016 quarter. We had recommended this stock earlier stating that volume growth would be good for the company and hence traction would be seen in results. The company has announced its June 2016 quarter results and the results are much ahead of street estimates.

With automobile companies posting good sales volume growth over the past quarter, it was expected that auto ancillary companies would also post good volume growth. Banco Products managed to outperform the street Estimates. For the quarter ended June 2016 the company posted a topline of Rs 385.75 crore and EBITDA Stood at Rs 64.68 crore as against Rs 318.94 crore and Rs 47.98 crore respectively for June 2016 quarter. The company has managed to post better performance on the sequential basis as well. For March 2016 quarter the company had posted a topline of Rs 292.09 crore and EBITDA of Rs 33.65 crore. As regards the bottomline the company posted a net profit of Rs 40.65 crore for June 2016 quarter as against Rs 27.93 crore posted in June 2015.

As regards the margins, there has been a consistent improvement in the margins. For June 2016 the EBITDA margins stood at 16.76 percent as against 15 percent in June 2015 quarter. We expect margins to sustain at higher levels. 

As for long term there are various factors that indicate towards strength in the company. Increased OEM customer counts indicates towards expected sustainable demand and focus of aftermarket sales to drive growth as well. Secondly, margin expansion possible as raw material prices decline significantly. Last but not the least, reduction in long term and short Term debt bodes well for the company. 

About the Company

Banco Products (India) Limited is company that is engaged in the business of manufacturing Gaskets and Radiators. The company also exports aftermarket radiators. Banco operates in one segment namely automobile ancillary business. The product portfolio of the company includes radiators, air coolers, Rubber Cork Gaskets, Aluminum Edge Moulded Gaskets, Steel Fiber Composite Gaskets and many more. These products are considered critical components in sealing and cooling applications of Automotive, Power, Earthmoving and Industrial engines.

Wild swings, Nifty failed to close above 8666, indicating the tug of war between Bulls and Bears continues. While Nifty Bulls and Bears continues to fight for next price action; stocks resumed its underlying trend. Thus we witnessed huge buying pressure in quality and fundamentally strong stocks. IT was a surprise pack though! We have identified that IT sector has turned down since the month of July; however we witnessed resumed buying interest in IT stocks. We still believe IT stocks could move lower and the bounce back that we are witnessing is merely a dead cat bounce. While the short term trend in Nifty still remains intact Bullish, we expect the Bears putting pressure as long as Nifty fails to close above 8666 – 8680 levels. Once crossed we could test 8878; on the other hand continuous failure to close above this resistance zone could trigger correction in Nifty by end of this week.

Maruti Suzuki India announced its July 2016 sales figures today. And if the overall numbers are anything to go by, company has managed to post good sales figures. For July 2016 Maruti Suzuki posted good 13.90 percent volumes growth on domestic sales front. There was marginal sales growth on exports front of 0.30 percent. This resulted in a simple 12.70 percent overall growth in July 2016. In absolute terms domestic sales for July 2016 stood at 1,22,778 units as compared to 1,10,405 units in July 2015.

If we take a look at the segment wise performance, segment A that constitutes Mini, Compact, super compact and midsize cars witnessed a growth of 2.20 percent. In absolute terms Passenger cars sales volumes in segment A stood at 93,634 units in July 2016 as compared to 91,602 units in July 2015. It was the utility vehicles sales that saw highest sales growth in percentage term (up 151.30 percent). In absolute terms July 2016 sales stood at 17382 units as against 6916 units in July 2015.

Following table provides a clear figures for the monthly sales figures.

Apart from the sales figures the company also announced price hike. The company announced increase in prices of select models ranging from Rs 1500 to Rs 5000 (Ex Showroom Delhi).

In case of newly launched models like Vitara Brezza and Baleno, the prices are being increased by upto Rs 20000 and up to Rs 10000 respectively. We think the company has strategically increased prices and impact would be visible from H2FY17. We have positive bias about the counter.

Maruti on weekly chart, stock price at Rs. 4868 has given a breakout of rounding pattern at Rs. 4743 level, and it’s moving towards northward direction, with sharp increase in volumes, indicate rally would be continue for the multi month.

Trader or investor can accumulate for the target of Rs. 5800 level, with Rs. 4600 stop loss on closing basis.

Wipro on weekly chart, we witness stock price is trading in a range bound from last 14 months at Rs 613.30 to Rs. 507.90 level. Also on lower side stock price having a strong support at Rs. 500 level, 4 times stock price has reversed form the same level.

If anyone is holding Wipro can hold with Rs. 500 level. Technically if anyone want to enter in Wipro can buy above downward sloping trend line. Any 2 close above the trend line, stock will shoot towards 676.60 levels.