Banco Products, :: Angel Broking Diwali Top Picks (Diwali Muharat)

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 Banco is a manufacturer of radiators and gaskets that have applications in
automobiles, oil engines, compressors and locomotives. The company is a leading
exporter of aftermarket radiators to Europe, with a growing presence in the America,
Middle East and African markets.
 The commercial vehicle (CV) industry contributed ~80.0% to the company's domestic
standalone sales in FY2014. We expect Banco to perform well on the back of
recovery in the global economy as well as revival in domestic CV demand.
 In order to focus on the core business, the company has divested its entire stake in
Lake Cement for US$17.7mn at an approximate premium of 52%. It is expected
that it will use the proceeds for acquisitions (in Europe) related to the core business.
We believe this will strengthen its core business and fortify its presence in the global
markets.
 We expect Banco to register a CAGR of 15.0% in revenue over FY2014-16E to
`1,536cr with an operating margin of 13.7% in FY2016E. The profit is expected to
grow at a CAGR of 20.4% over the same period to `130cr in FY2016E. At the
CMP, the company is trading at a PE of 7.6x FY2016E earnings. WWWe have a Buy
rating on the stock with a target price of rating on the stock with a target price of ```182 based on FY2016E PE of 10x. 182 based on FY2016E PE of 10x.