@nkabra wrote:
Value Investors,
I opened a thread on Balmer Lawrie company…
Balmer: Logistic business is bottom line driver, Tour and Travel segment is top line driver
BLC’s expansion plans to provide one stop logistics solutions with diversified operations, like setting up satellite branches
at Guntur and Indore, JV with Vizag Port Trust for setting up a Multi Modal Logistics Hub (which is already being approved
by Central Govt.) and setting up three new temperature controlled warehouses at Hyderabad, NCR and Mumbai would
boost high EBIT margin logistics business.
Balmer Lawrie (BL) is a Mini-Ratna I company with a rich history spread over
one and a half centuries of existence. It has a significant presence in industrial
packaging, logistics, travel & vacations, greases & lubricants, leather
chemicals and refinery & oilfield services. BL is the market leader in steel
barrels, greases and oilfield services in India. Its logistics division is the profit
driver of BL with over 3 CFS in Nhava Sheva, Chennai & Kolkata and offers a
wide range of logistics solutions for ocean, air & road freight. Its oils &
lubricants business has a growing retail presence with its Balmerol brand. It is
also one of the oldest IATA accredited travel agencies in India.
Logistics business to continue to drive growth and profitability with
major expansion plansWith capex plans of ~ ₹ 4 bn over the next 2 years, BL is setting up 3 cold chain
facilities in Hyderabad, Delhi NCR and Mumbai and a multimodal logistics park at
Vishakapatnam Port. With various policy initiatives for boosting agriculture & the
rural economy, considerable upside potential in cold storage usage and eventual
passage of GST, we believe this to be a logical move which would help augment
growth for BL. Also, the mobilization of ample cash reserves towards expansion is
expected to further improve ROE and bolster margins.
Increasing contributions from industrial packaging and lubricants
businesses on the back of subdued commodity prices
The industrial packaging and greases & lubricants businesses have witnessed
considerable expansion in margins in spite of a flat growth in sales due to benign
steel and crude oil prices. BL is also looking to widen its retail presence in
automobile lubricants with its Balmerol brand. We expect that the supply glut in
commodities would continue over the medium term and help the India - Centric
businesses of BL contribute even more to its bottom-line.
Other niche businesses to steadily expand
Travel and vacations segment is expected to continue to do well with stable demand
from government & PSUs for its ticketing business and a push to grow its value
added package tours segment. Leather chemicals and refinery & oilfield services
divisions continue to serve niche markets and offer potential upside triggers.ANY SUGGESTIONS BY MEMBERS WHO ARE TRACKING THIS STOCK.
I AM PLANNING TO ANALYZE AND INVEST.
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