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.
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