The Hindu Business Line : Balmer Lawrie hits 52-wk high on sustained buying

The stock has been moving up steadily for the last couple of weeks and gained around 25 per cent. The trading volumes have also gone up substantially.

According to brokers and dealers, institutional buying is reportedly behind the current surge. A block deal involving 1.18 lakh shares was reported on the BSE.

Balmer Lawrie and Company, a PSU, is into industrial packaging, logistics, travels and tours as also grease and lubricants. It is the largest manufacturer of steel barrels in India. It has a tie-up with Fuchs Petrolub, Switzerland, to market industrial and automotive lubricants.

According to Mr Rajesh Agarwal of CD Equisearch, the company's industrial packaging and logistic services strategic business units are showing encouraging growth. "Particularly the logistics business is currently fetching higher margin on its depreciated assets", he added. Sales and profit from this SBU has registered a sharp rise in during to the quarter ended on December 31, 2004. This division is likely to grow rapidly on the back of strong economic growth, he felt.

In the industrial packaging business, the company's cost reduction measures have paid off and it is poised to become the lowest cost producer in the industry. The company's properties (land & building) and investments, particularly in Kochi Refineries, are at a discount to market price on books, analysts pointed out.

According to Mr Devarsh Vakil of Anagram Stockbroking, a section of market players is expecting divestment announcement shortly for Balmer Lawrie. At today's closing price, the stock traded at 13 times its trailing 12-month EPS of Rs 14.7.

Balmer Lawrie Investments, the holding company, which holds 61.80 per cent in Balmer Lawrie, has also been witnessing buying interest of late.

According to Mr C.V. Desai, a minority shareholder in Balmer Lawrie Investments (BLI), disinvestment is just a matter of time. "The current market value of Balmer Lawrie shares held by BLI is more than Rs 200 crore, which comes to about Rs 73 per share. We believe that the disinvestment will be done at a premium to the market price. Even if it is done at the market price, the shares of BLI are currently available at a 35 per cent discount to its actual worth," he observed.

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