Stock watch: LG Balakrishnan & Bros

LG Balakrishnan and Bros (LGB) is a good scrip to watch out for in the future. In Monday's market, the stock moved up 3.10 per cent to Rs 43.30 as compared with its previous close of Rs 42.

Analysts believe the company to be fundamentally strong and expect them to report a topline growth of 13 per cent in FY06 and 16 per cent in FY07. In the industrial segment, the company has been gaining increasing acceptance for its products resulting in rapid growth. LGB is a part of Elgi group.

The company manufactures Automobile Transmission and Industrial Chains and Rubber Belts and Components mainly catering to the two wheelers. The company has 65 per cent market share in OEM (original equipment manufacturer) segment and 50 per cent market share in the replacement segment.

Analysts estimate the company's net profit for FY2006 to be around Rs 19 crore on net sales of around Rs 415 crore and the net profit for FY2007 to be around Rs 29 crore on net sales of Rs 482 crore.

Similarly they expect the EPS for FY2006 to be Rs 2.4. Recently the company has restructured itself and is concentrating on Hi Tech and Safety related lines of business which could give them better realisations going forward.

LGB has recently forayed into metal forming and forgings segment, where it expects to leverage its technical know how, expertise and recent acquisitions to achieve rapid growth.