Banco Products zooms on liberal bonus

Jai Kumar NR

New Delhi, Aug 10: Thanks to a 1:1 bonus from Banco Products, the stock has zoomed by 89.24 per cent in 15 trading sessions. The stock has been on a steady rise since May 25 from a level of Rs 35.6 and has so far gained 284.87 per cent in 44 trading sessions. The rally started at this counter in anticipation of a good performance for fiscal 1998-99. However, despite a not-so-impressive show for fiscal 1998-99, the stock did not fall as the bonus rumour kept the rally going. However, the company announced a good show for the first quarter of the current fiscal. The counter remained active and stock sustained its rally. Close on the heels of the Q1 show, the company announced the 1:1 bonus which further fueled the rally.

The company has a low equity base of Rs 3.37 crore. Although the bonus issue will double the equity base, the paid up capital will be low at Rs 6 crore. As the company is showing a early sign of good full year performance, the stock should enjoy a good discounting even after the equity dilution. For fiscal 1999, the company recorded a 14.3 per cent rise in sales to Rs 82.46 crore from Rs 72.14 crore in fiscal 1998. Operating profit marginally rose to Rs 14.02. In tandem, net profit rose by only 4.9 per cent to Rs 7.17 crore. For the first quarter of the current fiscal, net profit jumped from Rs 1.21 crore to Rs 2.33 crore.

The Q1 performance of the company improved as the auto sector is showing a small turnaround. Banco manufacturers gaskets and radiators which are used in automobiles, oil engines compressors, locomotives and various other industries. Its OEM customers include Telco, TVS Suzuki, Ashok Leyland, Mahindra & Mahindra, Maruti Udyog and the railways.

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