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Page 2 Source: Company, www.dynamiclevels.com
Banco Products (India) Ltd- Performer in Auto Ancilliaries
Banco Products Ltd 3
Business Lines 4
Company Financials 5
Shareholding Pattern 9
Mutual Fund Holding 9
Peer Comparison 10
Industry Outlook 11
Govt. Initiatives 12
Banco Valuation & Investment Rationale 13
Buy Price: Rs 210 Target: 270 FY16P/E: 15.7
Page 3 Source: Company, www.dynamiclevels.com
Banco Products (India) Ltd.
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.
Dynamic Levels is positive on the prospects on Banco as:
The consolidated EPS stood at 5.68 as compared to 3.02 QoQ which is a growth of 88% and growth of 45.6% YoY
The consolidated PAT stood at 40.65 as compared to 21.57 QoQ which is a growth of 88.4% and growth of 45.5% YoY.
Topline showed a growth of 32% from 287 Cr to 380 Cr QoQ
After more than fifty years of experience in this business, the BANCO brand is the most respected product brand in the aftermarket as well as has attained a reputation of being able to develop and deliver complex cooling solutions amongst OEM customers in various sectors as one stop solution provider.
Bano’s continuous Research and Development, adoption of new technology and processes, customer service, innovation and quick product development has improved the productivity of BPIL.
BANCO PRODUCTS SHARE PRICE PERFORMANCE
EXCHANGE SYMBOL BANCO
PRODUCTS Current Price * (Rs.) 217.35 Face Value (Rs.) 2
52 Week High (Rs.) 214.40 (05-
Aug-16)
52 Week Low (Rs.) 90.20 (25-Feb-
16)
Life Time high (Rs.) 214.40 (05-
Aug-16)
Life Time low (Rs.) 1.48 (22-Dec-
98) Average Daily Movement [ADM] 6.24 Average Volume [20 days] 400733 1 Month Return (%) 28.13 P/E Ratio (x) 15.73 Book Value 99.15 Market Cap 1412.14 (Cr) % of Promoter holding pledged 0
COMPANY PROFILE OF BANCO
PRODUCTS
Date of Incorporation 16-Mar-1961
Date of Listing 04-Oct-1995
Management
Name Designation
Mehul K Patel Chairman
Devesh A Pathak Director
Mukesh D Patel Director
Ramkisan Devidayal Director
Samir K Patel Director
Udayan P Patel Director
Kiran Shetty Executive Director
Himali H Patel WholeTime Director & CFO
Registered Office Address
Bil, Near Bhaili Railway Station,Padra Road,391410,Vadodra District,Gujarat,India
Website
http://www.bancoindia.com
Page 4 Source: Company, www.dynamiclevels.com
Business Lines:
Cooling Systems
Banco Products (India) Ltd. is a specialist in engine cooling systems with 49 years of experience in the field. It is one of the leading manufacturers and suppliers of original equipment for commercial vehicles, passenger vehicles and industrial products. Banco supplies most of the OEM’s within India and have started supplying OEMs in Europe, there is ongoing development for various inquiries for European/Japanese OEM’s. Banco Products India Ltd. is also India’s leading exporter of aftermarket radiators to the Europe, with a growing presence in the North American/Middle – Eastern/African and South American markets. Due to the products being designed beyond OE standards, exceptional quality standards and unbeatable warranties –exports have been growing at 30% annually.
Sealing Gaskets
Banco Products (India) Ltd. is a specialist in engine sealing systems, with five decades of experience in the field. It is one of the leading manufacturer and development partner to OEM companies, manufacturing diesel and petrol engines in India who are affiliated or are subsidiarires of leading multinational companies from Europe, Japan and the USA. In 2007, it commissioned a brand new factory to manufacture various types of Multi Layered Steel (MLS) Gaskets for Cylinder Heads and the Exhaust Manifold applications in technical collaboration of Japan Metal Gaskets (JMG), Japan.
Jointing Gaskets & Sheets
Banco Products (India) Ltd. is publicly listed joint stock company established in 1962, manufacturing gaskets and gasketing raw materials for all varieties for Industrial and Automotive applications. Today, complete gaskets, rubber coated steel beaded gaskets, compressed joining sheets and cork rubber materials are the main products of Gaskets Division which are being supplied to leading OEMs, engine builders and gasket manufacturers and distributors worldwide. Compressed Joining Sheet Division is equipped with German Troestar calenders, rubber mixers, solvent recovery plant, fully equipped laboratory for quality control checks of critical raw materials and to do various tests on final sheets based on ASTM, DIN, BS international standards. This division is ISO 9001 certified by Underwriters Laboratories Inc., USA. Banco has a proven track record of continuous development of new compressed fibre grades to meet objectives of specialized media selling, high temperature sealing, cost effective general purpose grades based on synthetic and aramid fibres.
Page 5 Source: Company, www.dynamiclevels.com
Company Financials:
Income Statement (in Cr) FY 2016 FY 2015 % Growth
Net Sales/Income from operations 135.69 134.26 1%
Other Operating Income 3.22 3.09 4%
Total Income From Operations 138.91 137.35 1%
Increase/Decrease in Stocks -2.11 6.07
Consumption of Raw Materials 76.11 73.35 4%
Employees Cost 7.38 6.67 11%
Depreciation 4.4 4.92 -11%
Other Expenses 26.67 25.77 3%
Total Expenditure 112.45 116.78 -4%
Operating Profit 26.46 20.57 29%
Other Income 14.76 5.62 163%
P/L Before Int., Excpt. Items & Tax 41.22 26.19 57%
Interest 0.08 0.19
P/L Before Tax 41.14 26 58%
Tax 8.24 6.12 35%
P/L After Tax from Ordinary Activities 32.9 19.88 65%
PAT 32.9 19.88 65%
Equity Share Capital 14.3 14.3 0%
EPS (Rs.) 4.6 2.78 65%
Page 6 Source: Company, www.dynamiclevels.com
Balance Sheet (In Cr) FY 2016 FY 2015 Growth%
EQUITIES AND LIABILITIES
SHAREHOLDERS FUNDS
Equity Share Capital 14.3 14.3 0%
Total Share Capital 14.3 14.3 0%
Revaluation Reserves 0.67 0.54 24%
Reserves and Surplus 439.02 394.19 11%
Total Reserves and Surplus 439.69 394.73 11%
Total Shareholders Funds 453.99 409.03 11%
NON-CURRENT LIABILITIES
Long Term Borrowings 0 4.32 -100%
Deferred Tax Liabilities [Net] 9.27 9.89 -6%
Long Term Provisions 2.58 2.67 -3%
Total Non-Current Liabilities 11.85 16.88 -30%
CURRENT LIABILITIES
Short Term Borrowings 1.94 0.42 362%
Trade Payables 40.32 22.95 76%
Other Current Liabilities 12.73 32.74 -61%
Short Term Provisions 34.97 19.66 78%
Total Current Liabilities 89.96 75.77 19%
Total Capital And Liabilities 555.8 501.68 11%
ASSETS
NON-CURRENT ASSETS
Tangible Assets 119.56 122.45 -2%
Intangible Assets 0.84 1.01 -17%
Capital Work-In-Progress 0.3 3 -90%
Fixed Assets 120.7 126.46 -5%
Non-Current Investments 162.77 171.24 -5%
Long Term Loans And Advances 5.8 6.42 -10%
Total Non-Current Assets 289.26 304.13 -5%
CURRENT ASSETS
Current Investments 0.33 0.37 -11%
Inventories 85.23 79.47 7%
Trade Receivables 97.98 74.37 32%
Cash And Cash Equivalents 73.26 27.5 166%
Short Term Loans And Advances 5.24 14.73 -64%
Other Current Assets 4.5 1.12 302%
Total Current Assets 266.54 197.56 35%
Total Assets 555.8 501.68 11%
Page 7 Source: Company, www.dynamiclevels.com
Cash Flow ( In Cr) FY 2016 FY 2015 % Growth
Net Profit/Loss Before Extraordinary Items And Tax 103.61 53.48 94%
Net CashFlow From Operating Activities 59.74 61.2 -2%
Net Cash Used In Investing Activities 30.82 62.83 -51%
Net Cash Used From Financing Activities -44.8 -102.82 -56%
Foreign Exchange Gains / Losses 0 0
Adjustments on Amalgamation / Merger / Demerger / Others
0 0
Net Inc/Dec In Cash And Cash Equivalents 45.76 21.21 116%
Cash And Cash Equivalents Begin of Year 27.5 6.29 337%
Raw Materials Used Value % of RM cost to Total Cost
Aluminium 104.3 42.9
Steel Sheets, Plates etc 1.02 0.41
Copper & Copper Alloy 27.59 11.35
Others 110.15 45.31
Total 243.06
Finished Product Name Sales % of Sales
Value to Total Sales
Aluminium Radiators 363.86 79.75
Copper Brass Radiators 73.75 16.16
Scrap 9.13 2
Others 8.9 1.95
Export Incentives 0.6 0.13
Total 456.24
Page 8 Source: Company, www.dynamiclevels.com
Ratios FY 2016 FY 2015 % Growth
PER SHARE RATIOS
Basic EPS (Rs.) 12.57 12.26 3%
Diluted EPS (Rs.) 12.57 12.26 3%
Cash EPS (Rs.) 17.42 16.99 3%
Book Value[Incl.RevalReserv]/Share (Rs.) 96.18 86.66 11%
Revenue From Operations / Share (Rs.) 168.39 157.83 7%
PBDIT / Share (Rs.) 22 21.68 1%
PBIT / Share (Rs.) 17.16 16.95 1%
PBT / Share (Rs.) 16.7 15.78 6%
Net Profit / Share (Rs.) 12.57 12.26 3%
NP After MI And SOA / Share (Rs.) 12.57 12.26 3%
PROFITABILITY RATIOS PBDIT Margin (%) 13.06 13.73 -5%
PBIT Margin (%) 10.18 10.73 -5%
PBT Margin (%) 9.91 9.99 -1%
Net Profit Margin (%) 7.46 7.76 -4%
NP After MI And SOA Margin (%) 7.46 7.76 -4%
Return on Networth / Equity (%) 13.08 14.15 -8%
Return on Capital Employeed (%) 12.61 13.39 -6%
Return On Assets (%) 9.33 10.66 -12%
Long Term Debt / Equity (X) 0 0.01 -100%
Total Debt / Equity (X) 0.05 0.02 150%
Asset Turnover Ratio (%) 125.11 137.32 -9%
LIQUIDITY RATIOS Current Ratio (X) 2.78 3.28 -15%
Quick Ratio (X) 1.47 1.75 -16%
Inventory Turnover Ratio (X) 3.68 4.41 -17%
Dividend Payout Ratio (NP) (%) 36.59 24.47 50%
Dividend Payout Ratio (CP) (%) 26.41 17.66 50%
Earning Retention Ratio (%) 63.41 75.53 -16%
Page 9 Source: Company, www.dynamiclevels.com
Shareholding Pattern
Shareholding Pattern June-16 Mar-16 Dec-15 Sep-15 Jun-15 Promoter and Promoter Group (%) 67.88 67.88 67.88 67.88 67.88
Indian 30.26 30.26 30.26 30.26 30.26
Foreign 37.63 37.63 37.63 37.63 37.63
Institutions (%) 4.50 4.93 5.16 7.40 7.68
FII 0.04 0.03 0.38 0.14 0.10
DII 4.46 4.91 4.78 7.25 7.57
NonInstitutions (%) 27.62 27.18 26.95 24.72 24.44
Bodies Corporate NIL NIL NIL 2.22 2.05
Others 27.62 27.18 26.95 22.50 22.39
Custodians NIL NIL NIL NIL NIL
Total no. of shares (cr.) 7.15 7.15 7.15 7.15 7.15
Mutual Funds Holding
Scheme Name Value
(Rs. Cr)
Holding %
Jul-16 Jun-16 May-16
Franklin India Smaller Companies Fund 29.36 0.84
HDFC Small & Midcap Fund - Regular Plan 12.72 1.39 1.29 1.14
Canara Robeco Balance 3.48 0.54 0.6
Reliance Small Cap Fund 3.37 0.14 0.14
HDFC Multiple Yield Fund - Plan 2005 - Regular Pl... 1.44 0.85
Canara Robeco India Opportunities Fund 1.42 1.17
HDFC Children Gifts - Savings Plan - Regular Plan 0.71 0.72 0.67 0.58
Canara Robeco India Opportunities Fund - Series 2 0.47 0.94
Page 10 Source: Company, www.dynamiclevels.com
Peer Comparison
Peer technical Analysis:
LTP 1 Week 1 Month 3 Month 6 Month 1 year
BANCO PRODUCTS 218.95 2.58 2.63 52.76 112.59 85.79
PRICOL 116.2 1.08 4.24 39.37 178.4 276.29
SUNDRAM FASTENERS 305 7.46 8.64 64.65 112.37 90.52
JBM AUTO 228.65 9.52 57.52 82.75 65.94 18.97
IGARASHI 739.95 6.46 8.02 15.51 50.62 26.31
FIEM INDUSTRIES 1056.55 -6.86 -0.95 24.47 30.91 102.14
MUNJAL SHOWA 209.5 11.11 19.37 20.84 25.91 21.59
Banco is a performer shares among its peers
Peer Fundamental Analysis
INSTRUMENT Market Cap (Rs.
in Cr)
% Pledged % FII Holding
P/E Ratio (X)
Debt Equity
Ratio (X)
Int. Coverage Ratio (X)
BANCO PRODUCTS 1576 0 0.04 15.52 0.05 48.6
FIEM INDUSTRIES 1248 0 8.49 21.21 0.4 8.13
IGARASHI 2296 0 0.85 34.22 0.08 24.23
JBM AUTO 931 0 2.5 17.4 1.35 3.73
MUNJAL SHOWA 864 0 2.77 14.91 0 961.69
PRICOL 1106 7.23 0.06 17.36 0.29 5.28
SUNDRAM FASTENERS 6419 0 2.18 26.26 0.61 6.22
Banco is a low Debt and Low PE company
Page 11 Source: Company, www.dynamiclevels.com
Industry outlook:
Introduction: The Indian auto-components industry has experienced healthy growth over the last few years. Some of the factors attributable to this include: a buoyant end-user market, improved consumer sentiment and return of adequate liquidity in the financial system. The auto-components industry accounts for almost seven per cent of India’s Gross Domestic Product (GDP) and employs as many as 19 million people, both directly and indirectly. A stable government framework, increased purchasing power, large domestic market, and an ever increasing development in infrastructure have made India a favourable destination for investment. Market Size: The Indian auto-components industry can be broadly classified into the organised and unorganised sectors. The organised sector caters to the Original Equipment Manufacturers (OEMs) and consists of high-value precision instruments while the unorganised sector comprises low-valued products and caters mostly to the aftermarket category. Over the last decade, the automotive components industry has scaled three times to US$ 40 billion in 2015 while exports have grown even faster to US$ 11 billion. This has been driven by strong growth in the domestic market and increasing globalisation (including exports) of several Indian suppliers. The Indian Auto Component industry is expected to grow by 8-10 per cent in FY 2017-18, based on higher localisation by Original Equipment Manufacturers (OEM), higher component content per vehicle, and rising exports from India, as per ICRA Limited. According to the Automotive Component Manufacturers Association of India (ACMA), the Indian auto-components industry is expected to register a turnover of US$ 100 billion by 2020 backed by strong exports ranging between US$ 80- US$ 100 billion by 2026, from the current US$ 11.2 billion. Investments The cumulative Foreign Direct Investment (FDI) inflows into the Indian automobile industry during the period April 2000 – March 2016 were recorded at US$ 15.07 billion, as per data by the Department of Industrial Policy and Promotion (DIPP).
Page 12 Source: Company, www.dynamiclevels.com
Government Initiatives The Government of India’s Automotive Mission Plan (AMP) 2006–2016 has come a long way in ensuring growth for the sector. It is expected that this sector's contribution to the GDP will reach US$ 145 billion in 2016 due to the government’s special focus on exports of small cars, multi-utility vehicles (MUVs), two and three-wheelers and auto components. Separately, the deregulation of FDI in this sector has also helped foreign companies to make large investments in India.The Government of India’s Automotive Mission Plan (AMP) 2016–2026 envisages creation of an additional 50 million jobs along with an ambitious target of increasing the value of the output of the sector to up to Rs 18,89,000 crore (US$ 282.65 billion). Road Ahead The rapidly globalising world is opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt to the change via systematic research and development. The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalisation of the sector as exports potential could be increased by up to four times to US$ 40 billion by 2020.
Page 13 Source: Company, www.dynamiclevels.com
Banco Valuations & Investment Rationale
After more than fifty years of experience in this business, the BANCO brand is the most respected product
brand in the aftermarket as well as has attained a reputation of being able to develop and deliver complex
cooling solutions amongst OEM customers in various sectors as one stop solution provider.
Bano’s continuous Research and Development, adoption of new technology and processes, customer
service, innovation and quick product development has improved the productivity of BPIL.
Adoption of sound financial disciplined processes.
Advanced use of IT in all stages of operations
Developing OEM customers globally to whom we already supply in India.
Leverage BANCO brand in aftermarket business segment.
Company has significantly increased OEM customer count and product approvals which should benefit
when overall economy picks up.
Domestic CV industry is expected to grow at 10% CAGR on better growth in road infra projects &
improvement in fleet operators’ business model which will push volume growth in radiator sales.
FY16 standalone revenue grew by 17% due to increase in demand from OEMs (Original equipment
manufacturers) & aftermarket sales.
FY16 consolidated EBITDA margin improved by 12.1% due to lower Raw Material cost.
BPIL is present in international OEM market through its overseas subsidiary NRF (Fully owned). Revenue
from overseas business which accounts for 60% of the consolidated revenue was flat (0.4%YoY) in FY16.
Slowdown in international truck sales has been impacting the overseas business. It is expected that Banco
will start witnessing some recovery and factor 11% CAGR in consolidated revenue during FY16-17.
Consolidated Earnings increased 88% QoQ from 3.02 Per share to 5.68 per share
We initiate coverage on Banco Products as a BUY @210 with a target of Rs 270 representing a
potential upside of 28% from the buy price. Banco is trading at a PE of 15.76.
Page 14 Source: Company, www.dynamiclevels.com
Disclaimer: Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014. Dynamic Equities Pvt. Ltd. is a member of National Stock Exchange of India Ltd. (NSEIL), Bombay Stock Exchange Ltd (BSE), Multi Stock Exchange of India Ltd (MCX-SX) and also a depository participant with National Securities Depository Ltd (NSDL) and Central Depository Services Ltd.(CDSL). Dynamic is engaged in the business of Stock Broking, Depository Services, Investment Advisory Services and Portfolio Management Services. Dynamic Equities Pvt. Ltd. is holding company of Dynamic Commodities Pvt. Ltd. , a member of Multi Commodities Exchange (MCX) & National Commodity & Derivatives Exchange Ltd.(NCDEX). We hereby declare that our activities were neither suspended nor we have defaulted with any stock exchange authority with whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection and based on their observations have issued advise letters or levied minor penalty on for certain operational deviations. Answers to the Best of the knowledge and belief of Dynamic/ its Associates/ Research Analyst who prepared this report
DYANMIC/its Associates/ Research Analyst/ his Relative have any financial interest in the subject company? No
DYANMIC/its Associates/ Research Analyst/ his Relative have actual/beneficial ownership of one per cent or more securities of the subject company? No
DYANMIC/its Associates/ Research Analyst/ his Relative have any other material conflict of interest at the time of publication of the research report or at the time of public appearance? No
DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation from the subject company in the past twelve months? No
DYANMIC/its Associates/ Research Analyst/ his Relative have managed or co-managed public offering of securities for the subject company in the past twelve months? No
DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past twelve months? No
DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past twelve months? No
DYANMIC/its Associates/ Research Analyst/ his Relative have received any compensation or other benefits from the Subject Company or third party in connection with the research report? No
DYANMIC/its Associates/ Research Analyst/ his Relative have served as an officer, director or employee of the subject company? No
DYANMIC/its Associates/ Research Analyst/ his Relative have been engaged in market making activity for the subject company? No
General Disclaimer: - This Research Report (hereinafter called “Report”) is meant solely for use by the recipient and is not for circulation. This Report does not constitute a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual clients. The recommendations, if any, made herein are expression of views and/or opinions and should not be deemed or construed to be neither advice for the purpose of purchase or sale of any security, derivatives or any other security through Dynamic nor any solicitation or offering of any investment /trading opportunity on behalf of the issuer(s) of the respective security (ies) referred to herein. These information / opinions / views are not meant to serve as a professional investment guide for the readers. No action is solicited based upon the information provided herein. Recipients of this Report should rely on information/data arising out of their own investigations. Readers are advised to seek independent professional advice and arrive at an informed trading/investment decision before executing any trades or making any investments. This Report has been prepared on the basis of publicly available information, internally developed data and other sources believed by Dynamic to be reliable. Dynamic or its directors, employees, affiliates or representatives do not assume any responsibility for, or warrant the accuracy, completeness, adequacy and reliability of such information / opinions / views. While due care has been taken to ensure that the disclosures and opinions given are fair and reasonable, none of the directors, employees, affiliates or representatives of Dynamic shall be liable for any direct, indirect, special, incidental, consequential, punitive or exemplary damages, including loss profits arising in any way whatsoever from the information / opinions / views contained in this Report. The price and value of the investments referred to in this Report and the income from them may go down as well as up, and investors may realize losses on any investments. Past performance is not a guide for future performance. Dynamic levels do not provide tax advice to its clients, and all investors are strongly advised to consult with their tax advisers regarding taxation aspects of any potential investment. Opinions expressed are our current opinions as of the date appearing on this Research only. We do not undertake to advise you as to any change of our views expressed in this Report. User should keep this risk in mind and not hold dynamic levels, its employees and associates responsible for any losses, damages of any type whatsoever. Dynamic and its associates or employees may; (a) from time to time, have long or short positions in, and buy or sell the investments in/ security of company (ies) mentioned herein and it may not be construed as potential conflict of interest with respect to any recommendation and related information and opinions. Without limiting any of the foregoing, in no event shall Dynamic and its associates or employees or any third party involved in, or related to computing or compiling the information have any liability for any damages of any kind. We and our affiliates/associates, officers, directors, and employees, Research Analyst(including relatives) worldwide may: (a) from time to time, have long or short positions in, and buy or sell the securities thereof, of company (ies) mentioned herein or (b) be engaged in any other transaction involving such securities and earn brokerage or other compensation or act as a market maker in the financial instruments of the subject company/company (ies) discussed herein or act as advisor to such company (ies) or have other potential/material conflict of interest with respect to any recommendation and related information and opinions at the time of publication of Research Report. Dynamic may have proprietary long/short position in the above mentioned scrip(s) and therefore may be considered as interested. The views provided herein are general in nature and does not consider risk appetite or investment objective of particular investor; readers are requested to take independent professional advice before investing. This should not be construed as invitation or solicitation to do business with Dynamic. Dynamic Equities Pvt. Ltd. are also engaged in Proprietary Trading apart from Client Business.
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