Banco Products

Banco Products (I) Ltd (BPIL) is one of the leading auto ancillary companies. It manufactures sealing products (gaskets) and heat exchangers (radiators, intercoolers, oil coolers, etc). The company has strong client-base such as M&M, Maruti, Tata Motors, Indian Railways, Ashok Leyland, etc. Strong ties with original equipment manufacturers OEMs, de-risked business and inexpensive valuations make the stock attractive.

Being a leading manufacturer of automobile radiators in India, particularly in the heavy vehicle & equipment segment, Banco is set to benefit from the sustained automobile growth. Besides benefiting from demand from OEMs, increased penetration in the non-auto space would de-risk revenue concentration in autos. The acquisition of NRF, Holland, would provide Banco better access to the European market.

The financials of the company also looks  good and recently posted good numbers in terms of results. The quarterly results were good and it showed more than 40% growth in net profit. The NPM and OPM also increased which shows the strong hold of the company in its business operations. The stock is undervalued and the P/E ratios is 15 as compared to industry P/E ratios of 47. The debt to equity ratio has decreased which shows that the company is focussed towards decreasing their debts to minimum. The current ratio is 1.73 and quick ratio is 1.56 which is considered very good in terms of liquidity of the company. The gross profit margins, return on asset ratio and return on net worth has also increased significantly over the years. The inventory turnover ratio has also increased which shows that the company is clearing its inventories faster and hence, saving its inventory handling cost. The company has paid dividend at regular intervals. At CMP of 158, it can be bought for long term. Please do your own evaluation before investing.