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HDFC Securities Retail Research
LG Balakrishnan and Brothers Ltd. has posted decent results for Q1 FY23. There was pressure on margin due to material inflation, as the company has passed on most of the material inflation but it had to absorb some of the expenses.
The recent correction in steel prices should provide some respite on the margin front. FY23 two-wheeler sales have been on a strong wicket so far with Hero Motocorp Ltd. and TVS Motor Company Ltd. witnessing 24% and 30% YoY volume growth during April-July 2022.
Revival in economy and increasing preference for personal mobility gives us confidence that two-wheeler sales would remain strong in the next few quarters.
Entry into industrial chains segment would reduce LG Balakrishnan and Bros' dependence on automobile sector de-risking its revenue.
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