Balmer Lawrie Ltd was founded by two Scotsmen, Balmer and Lawrie in 1867 as a partnership firm. In 1972 it became a government company under the IBP Balmer Lawrie group of companies. This company was subsequently merged with the Indian Oil Corporation. Today, Balmer Lawrie headquartered in Kolkata functions as a Mini Ratna public sector undertaking under the Ministry of Petroleum and Natural Gas. Presently the Central government indirectly owns close to 65% of the teeny-weeny paid up capital of Rs 28 crore. This capital base is however backed up by humongous reserves and a surplus of Rs 900 crore. On a Rs 10 face value, the Balmer Lawrie stock currently trades on the NSE and BSE at Rs 550. . The company has been growing at a steady 11% year-on-year with revenues, EBIDA, profits and dividends trending upwards. With a net worth of over Rs 900 crore on a tiny equity of Rs 28 crore, the gross turnover per annum is around Rs 3,000 crore. On a PAT of Rs 150 crore, the EPS and PE works out to a fantastic Rs 58 and 9.62 respectively. Dividend yield of the company is attractively priced around 3.25%. Looking at the huge cash pile in its books, purchasing the Balmer Lawrie stock at the current price of Rs 550 would technically cost only Rs 150 after adjusting the cash and bank balance. It is also a good candidate for government disinvestment in the near future and purchasing the company stock at the present juncture leaves ample room for superb appreciation in the next 12-18 months time horizon. The Indian stock markets barometer BSE Sensex rallied strongly in late trade on Friday climbing 275 points to close at 24,952 while the NSE Nifty jumped 91 points to settle at 7,604 levels. Importantly, the index has gained more than 11% from the budget day. The rally has been brought in on the back of FII increasing their exposure to Indian stocks by pumping in over Rs 10,000 crore in this month alone. Announcement by the government today in cutting small saving interest rates like PPF, NSC, KVP, MIS, term deposits, etc from the next fiscal may now propel the RBI and banks to cut rates further. This may take the indices higher in the short term.
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.