STOCK WATCH: Balkrishna Inds

Balkrishna Industries could be a good prospect. The stock ended at Rs 930.25 compared with its previous close of Rs 901.45, 3.19 per cent up with 15,381 shares traded on Thursday at the Bombay Stock Exchange (BSE).

Balkrishna Industries is the largest exporter of niche tyres. It also manufactures paper besides processing synthetic textiles and tyres.

Says Alok Agarwal, senior analyst, Motilal Oswal Securities, "We expect the company's topline to grow at 35 per cent and its net profit by 45-50 per cent compounded annual growth rate over the next 3-4 years."

The company declared a dividend of Rs 10 per share in FY05 compared With Rs 5.50 in the last year. The company gets 75 per cent of its revenue from the tyre division, 20 per cent from the paper/ duplex board segment with the remaining 5 per cent generated from their textiles division.

For the current year, the company expects sales over Rs 650 crore and profit after tax at around Rs 85 crore. The company's equity is up from 6.19 crore in FY03 to 18.58 crore in FY05 as it announced two bonus issues, one in the ratio of 1:1 and the other in the ratio of 1:2.

For FY05, the company had an earnings per share of Rs 45 and in FY07 analysts expect the company to achieve an EPS of Rs 65. Based on FY07 estimates, the stock trades at a P/E of 14.3.