L.G. Balakrishnan & Bros Limited

Consumer Cyclical — Auto Parts · NSE

₹1,685.00−₹21.60 (−1.27%)

DalalBaazaar Score

60 / 100

🟢 Good

Verdict

NEUTRAL

Risk

Low

Driven by negative free cash flow, small-cap size, which brings sharper price swings.

In simple words: Strong business and financial position, with modest growth. Cash generation is currently the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of L.G. Balakrishnan & Bros Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

L.G. Balakrishnan & Bros Limited manufactures and sells chains, sprockets, and metal formed parts for automotive and industrial applications in India and internationally. The company operates through Transmission and Metal Forming segments.

IndustryAuto Parts

SectorConsumer Cyclical

Employees3,717

Annual revenue₹2,881 Cr

How does it make money?

Turns over ₹2,881 Cr a year. Of every ₹100 of sales, about ₹11 reaches shareholders as profit, with ₹19 left at the operating level before interest, tax and depreciation. Each of its 3,717 employees supports ₹77.5 lakh of revenue a year, the signature of a people-led business.

EBITDA margin19.2%

Net margin11.1%

Revenue / employee₹77.5 lakh

Who are its competitors?

The closest listed comparisons in its industry are BOSCH LIMITED, MARUTI SUZUKI INDIA LTD., TVS MOTOR COMPANY LTD, EICHER MOTORS LTD. These are the companies its valuation and returns are measured against elsewhere in this report.

BOSCH LIMITEDP/E 56.9x · ROE 15.9%

MARUTI SUZUKI INDIA LTD.P/E 25.2x · ROE 13.4%

TVS MOTOR COMPANY LTDP/E 56.8x · ROE 35.8%

EICHER MOTORS LTDP/E 34.7x · ROE 23.0%

What is its competitive advantage?Some evidence

ROCE of 19.3% is above what capital typically costs, which suggests some pricing power, though not yet the sustained, wide gap that marks a durable advantage.

ROCE19.3%

ROE14.8%

Peer median ROE23.0%

What is the outlook?

1 analysts covering the stock expect revenue to grow about 13.2% and earnings to grow about 10.3% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+13.2%

Est. earnings growth+10.3%

Analysts1

What has been driving growth?

Growth has come mainly from selling more, rather than from keeping more of each sale. Over 3 years revenue moved +42% while net margin moved -11% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+42%

Margin effect-11%

DalalBaazaar Score

60/ 100

Good

Weighted across six categories. Every point is explained below.

• ROE of 14.8% is moderate
✗ ROE has fallen by 3.7 points over the period

Quality vs. Valuation

Company Quality

60/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

63/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

16.9x

3Y Median

15.8x

40 monthly readings · mean 15.9x · range 13.3x–20.6x

Sector Median

45.7x

median of 4 sector peers

🟡Currently trading close to its 3y median of 15.8x — the market is paying about what it usually pays for this company.

🟢Against its sector it trades 63% below the peer median of 45.7x.

vs. its own history

Fair

15.8x median over 40 months · +6%

vs. sector peers

Cheap

45.7x median of 4 peers · -63%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

16.9x

P/B

2.50x

EV/EBITDA

10.1x

PEG

2.07

Dividend Yield

1.31%

What's Good / What's Bad

🟢 What's Going Well2

Very low debt
Debt/Equity of 0.11x leaves the balance sheet with plenty of headroom.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention4

Debt is rising
Total debt is up 122% over 3 years — worth checking what it funded.
Free cash flow is negative
The business is not currently covering its capital spending from operations.
Return on equity is falling
ROE has dropped from 18.5% to 14.8% — each rupee of shareholder capital earns less than it did.
Return on capital is falling
ROCE has declined from 24.4% to 19.3% — often a sign of competition or overexpansion.

Red Flags

2 items require attention · 1 high · 1 watch

🔴Debt has risen sharplyFinancial
Total debt is up 122% over 3 years, from ₹104 Cr to ₹231 Cr.
🟡Free cash flow is negativeFinancial
Free cash flow was -₹40 Cr in the latest year.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Capital compounds at a high rate
ROCE of 19.3% means each rupee reinvested earns well above what capital costs. If the company can keep deploying at this rate, growth creates value rather than just consuming cash.
Cheaper than its peers
It trades 63% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Returns on shareholder capital are falling
ROE has dropped from 18.5% to 14.8%. Each rupee of equity earns less than it did, so profit growth increasingly depends on raising more capital rather than on the existing base working harder.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1Revenue growth stays above 9% a year✓ 12.3% CAGR
Latest reported year was 21.6%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
2EBITDA margin holds above 17%✓ 19.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
3Free cash flow remains positive✗ -₹40 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.4x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 16%✓ 19.3%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

8 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✓ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✗ Generates positive free cash flow
✓ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✗ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✓ Short-term technical trend isn't bearish

Price history

Quick Metrics

4 good · 6 neutral · 1 weak

Market Cap

₹5,375 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

16.9x

Fair

Fairly valued against the generic band

P/B Ratio

2.50x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹99.96

Profitable

Profitable on a per-share basis

ROE

14.8%

Moderate

Moderate capital efficiency

ROCE

19.3%

Strong

Earns comfortably above its likely cost of capital

Debt/Equity

0.11x

Low

Conservative leverage

Revenue Growth (YoY)

21.6%

Healthy

Healthy top-line growth

Profit Growth (YoY)

0.0%

Modest

Slow profit growth

Dividend Yield

1.31%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

-₹40 Cr

Cash burning

Spending more cash than the operations bring in

More Metrics

CMP

₹1,685

P/E (Forward)

14.9x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

9.1%

Average

Average margins

Net Margin

9.9%

Average

Average bottom-line conversion

Current Ratio

1.78

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.09

Defensive

Steadier than the market

52W Range Position

50%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

1706.3 / 1673.0

Bullish alignment (short > long)

Price vs SMA 200

Above

Long-term uptrend

RSI (14)

43.1

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹2,035 Cr	₹2,195 Cr	₹2,419 Cr	₹2,881 Cr	+12.3%
EBITDA	₹406 Cr	₹444 Cr	₹471 Cr	₹552 Cr	+10.8%
EBITDA Margin	20.0%	20.2%	19.5%	19.2%	—
PAT (Net Profit)	₹252 Cr	₹271 Cr	₹302 Cr	₹319 Cr	+8.2%
EPS	₹80.25	₹86.44	₹95.44	₹99.95	+7.6%
ROE	18.5%	16.5%	15.9%	14.8%	—
ROCE	24.4%	21.8%	20.1%	19.3%	—
Total Debt	₹104 Cr	₹115 Cr	₹157 Cr	₹231 Cr	+30.4%
Free Cash Flow	₹223 Cr	₹181 Cr	-₹12 Cr	-₹40 Cr	—

🟢 Revenue has grown at 12.3% a year over 3 years.

🟢 EBITDA has grown at 10.8% a year over 3 years.

🟡 EBITDA Margin has held roughly flat at 19.2% over 3 years.

🟢 PAT (Net Profit) has grown at 8.2% a year over 3 years.

🟢 EPS has grown at 7.6% a year over 3 years.

🔴 ROE has fallen from 18.5% to 14.8% over 3 years (-3.7 pts).

🔴 ROCE has fallen from 24.4% to 19.3% over 3 years (-5.1 pts).

🔴 Total Debt has grown at 30.4% a year over 3 years.

🔴 Free Cash Flow has turned negative, from ₹223 Cr to -₹40 Cr.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹2,995 Cr

Total Liabilities

₹839 Cr

Total Debt

₹231 Cr

Cash & Equivalents

₹21 Cr

Operating Cash Flow

₹332 Cr

Capex

-₹371 Cr

Shareholding (proxy)

Institutional Holding

17.2%

Insider Holding

37.7%

Corporate Actions

Dividend Rate

₹22

Ex-Dividend Date

19 Aug 2026

Analyst Consensus

Recommendations

1 Buy · 0 Hold · 0 Sell

Target Price (Mean)

₹2,035

+20.8% vs CMP

Target Range

₹2,035 – ₹2,035

Peer Comparison

Company	P/E	ROE
BOSCH LIMITED	56.9x	15.9%
MARUTI SUZUKI INDIA LTD.	25.2x	13.4%
TVS MOTOR COMPANY LTD	56.8x	35.8%
EICHER MOTORS LTD	34.7x	23.0%

Recent News

1 positive3 mixed2 general

Is LG Balakrishnan and Bros the Best Stock in Its Sector? A Look at the Numbers

Univest, 30 Sept

LG Balakrishnan & Bros Annual Report FY2025-26: Revenue Surges 19%, Dividend at ₹22/Share

scanx.trade, 30 JulCapital return

🟢Potentially positiveCash or shares returned to holders. A buyback is only good value if the shares were cheap when bought.

LGBBROSLTD Forecast — Price Target — Prediction for 2027

TradingView, 25 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

LG Balakrishnan sees 17-18% growth in FY27 despite rising costs, warns of margin hit

CNBC TV18, 04 May

Improved Earnings Required Before L.G. Balakrishnan & Bros Limited (NSE:LGBBROSLTD) Stock's 29% Jump Looks Justified

Simply Wall Street, 05 NovResults

🟡Mixed / dependsA results event. The figures on this page update once the new statements reach the data feed, which usually lags the announcement.

LG Balakrishnan and Bros Share Price Target 2026: Rs 1,900 Analyst Forecast

Univest, 23 JunAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate11.8/20

🟢Financial HealthStrong13/20

🟢GrowthStrong13.4/20

🟡ProfitabilityModerate7.1/15

🟡ValuationFair9.3/15

🟡RiskModerate5.8/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓Revenue growth stays above 9% a year12.3% CAGR
✓EBITDA margin holds above 17%19.2%
✗Free cash flow remains positive-₹40 Cr
✓Debt / EBITDA stays below 2x0.4x
✓ROCE stays above 16%19.3%