: Daily Market Outlook:20th December, 2007 (Thursday)

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Buzzing stock
BUY BUY BUY BATLIBOI
Equity: 13.5 Cr, BSE Code: 522004, CMP: 87.9
BATLIBOI @ 87 / 88 Target : 96 to 98

Batliboi, one of Indias oldest machine tool & engineering companies, has reported impressive performance for Q2 FY 2008. Batliboi is a leader in textile humidification systems, which are used to maintain moisture during the spinning process. With abolition of quota regime, textile industry is on capacity expansion spree with heavy investments coming in spinning segment. As spindlage capacity expands, demand for these systems will continue to rise over next couple of years.
Batliboi, being a leading player with 35% market share, is expected to be one of the biggest beneficiaries of this upward capex cycle in textile industry. Machine tool division is another core business. To augment growth of this division, company acquired 100% stake in Quick mill (QM) Inc, Canada for Rs 26 crore. QM is in special purpose machine tools with presence in niches of large area CNC Gantry and Bridge Type Milling & Drilling Machines catering to customers manufacturing heat exchangers, heavy equipment (customer Caterpillar), fabricated steel, aerospace (customer - Boeing), dies & moulds, bridge building machinery and automotives. QM enjoys 75% market share in heat exchangers in North America. Acquisition is win-win situation for both companies as they get access to each others market. Batliboi has added advantage because it will act more as an outsourcing base for QM.
Besides this, it has also acquired 70% stake in AESA France (CY 2006 sales Rs 71 crore; Loss of Rs 7 crore) in Industrial Air Engineering for Rs 9 crore. Sales and NP for year ended 06 07 were 128.1 Cr & 34.9 Cr. Sales and NP for latest Quarter 13.2 Cr & 2.8 Cr.