NRB Bearings Ltd. share price target

Valuation at 17x P/E on FY27E earnings, is at significant discount as compared to peers' valuations. Despite factoring in the fact that NRB's presence in only auto space, we believe that this seems unjustified considering the company's focus on growth. We maintain BUY on NRB with...

NRB is India's largest needle and cylindrical roller bearings producer. Today 90% of vehicles on Indian roads run on NRB parts It exports its products to many countries such as France, Italy, the US, Mexico, Brazil, Thailand and Bangladesh. It has a revenue break-up of 78%...

NRB took a price hike in the range of 5-7% in January. Going ahead, another hike of 4-5% is expected in order to pass on higher input costs. We believe a strong H2 and overall better FY22 volume should aid NRB to achieve 16%...

NRB exited the quarter with an EBIDTA margin of 17.6%, which grew ~ 680 bps YoY. This was largely on account of positive operating leverage and low cost steel inventory. We are sceptical that these margins will be sustained in the coming quarters, given the sharp rise in input (steel) prices in recent...

While domestic OEMs were reeling under tepid demand, NRB's exports segment did well, thereby sustaining utilisation levels at factories. Export performance was aided by higher wallet share from existing customers (ZF & Getrag) as well as addition of two new customers. The management expects exports to be upwards of 20% in the FY21E topline. On the domestic front, demand for tractors remained buoyant led by a good monsoon and relatively lesser impact of the pandemic in rural areas. Further, 2-W, PV have seen an uptick whereas CV is gaining some momentum. On the other hand,...

Companies like Larsen & Toubro and KEC with exposure to the Middle East and North Africa (MENA) region are expected to get impacted by the recent more than 60% fall in crude oil prices to US$22/barrel. This is expected to impact overall orders/awarding from the MENA region. Companies like Elgi Equipments, AIA Engineering, Thermax, Engineers India and Kalpataru Power with exposure to international geographies like Europe, Middle East, China for sales or essential raw material may get impacted. However, lockdowns in India, UK, Europe and other geographies due to Covid-19 are...

Headwinds in domestic OEMs to result in sluggish FY20E Domestic OEM segment witnessed double digit de-growth in the midst of a slowdown in the auto sector. Domestic OEM (two-wheelers, CV comprise highest share in OEM segment) contributes to ~69% of topline. Going ahead, we expect some short-term pain in this segment, which can be followed by some recovery starting H1FY21. Margins look to have bottomed out with the company benefitting from the lag effect of low steel prices in the first half of the year. This should cushion EBITDA as well as bottomline...

Headwinds in domestic OEMs to lead to sluggish FY20E Domestic OEM segment witnessed double digit de-growth in the midst of a slowdown in the auto sector. Domestic OEM (two-wheelers and CV comprise highest share in the OEM segment) contributes to around ~69% of NRB's topline. Going ahead, we expect some short-term pain in this segment, which can be followed by some recovery starting H1FY21. On the raw material front, the company is expected to benefit from the current decline in steel prices starting from Q4FY20E onwards, which should...

For FY19, NRB witnessed growth of 12.8%YoY driven by healthy growth in domestic OEM and exports. Domestic OEMs and exports grew ~15% YoY and 20% YoY, respectively. After markets segment declined YoY as NRB shifted most of its capacities for fulfilling demand of its OEM customers. EBITDA margins also came in strong at 19.2% for the year due to efficient inventory management and pass through of input prices at regular intervals. Going ahead, the domestic OEM segment is likely to witness moderation in growth with corresponding slowdown in auto volume growth and...

Friction Solutions Provider: Revenue for Q3FY19 grew by 17.0% aided by improved volumes from both domestic & export fronts along with low base effect.

We value the stock at Rs 217(17xDec-20E EPS). Maintain Neutral. NRB reported an in-line quarter with beat in revenue growth (17% vs. est of 11%) while EBITDA margins declined to 17.3% (-210/100bps yoy / qoq), which was below our estimates of 17.9%. Revenues at Rs 2.4bn were fuelled by strong growth in the 2W segment and robust export sales. EBITDA rose 4% yoy to Rs 420mn as the contraction in margins - benefit of a richer product mix (higher revenue from Needle bearing) was partially offset by an increase in other expenses (higher freight expenses and forex losses~ Rs 50mn). PAT came at Rs. 268mn (+26% YoY) supported by a lower tax rate.

ICICI Securities Ltd | Retail Equity Research NRB Bearings reported mixed Q3FY19 numbers. The company reported in line topline numbers, albeit with lower margins (other expenses increased 38.1% YoY). Revenues came in at | 242.6 crore, up 16.7% YoY. We estimated revenues of | 242.4 crore. We believe strong topline growth was on account of robust performance across all segments i.e. domestic OEMs, after-markets and exports EBITDA increased 3.7% YoY to | 42 crore. The company reported...

Revenue growth & stable margins: Q2FY19 earnings recorded a YoY growth of 37.7% owing to a YoY revenue growth of 20.6%.

NRB Bearings reported stellar Q2FY19 numbers. Revenues came in at | 251 crore up 20.6% YoY. We estimated revenues of | 240 crore (15.5% YoY growth) for the quarter. We believe strong topline growth was on account of robust performance across all segments i.e. domestic OEMs, after-markets and exports EBITDA increased 20.4% YoY to | 46.1 crore. The company reported strong EBITDA on account of sharp increase in gross margins, 300 bps YoY during the quarter. However, other expenses also increased...

Expect 11% EPS CAGR over FY18-21E. We value the stock at Rs 217(17xSept-20E EPS). Maintain Buy NRB delivered strong performance in 2Q. Revenue grew 21% YoY to Rs 2.5bn (ahead of its peers like SKF +13%), fuelled by strong growth across OEMs segments (2W, CV and tractor segment) and robust export sales. EBITDA rose 20% YoY to Rs 461mn with margin at 18.4% (flat YoY), as a benefit of richer product mix (higher revenue from CVs and Needle bearing) was partially offset by an increase in other expenses (one-time consultancy fee, higher marketing and freight expenses).

Revenue growth & strong margins: Q1FY19 earnings recorded a YoY growth of 43.5% owing to a YoY revenue growth of 30.6% fuelled by an EBITDA margin expansion of 369 bps (vs our expectation of 269 bps).

We value the stock at Rs 217(18xFY20E EPS). Maintain Buy NRB posted strong numbers in 1QFY19. Revenue came in at Rs 2.34bn (+31% YoY), fuelled by strong growth across OEMs segments (2W, CV and tractor segment) and export. EBITDA rose 69% YoY to Rs 444mn with stellar margin at 19% (+369bps YoY) driven by operating leverage and richer product mix (higher revenue from CVs). APAT at Rs. 243mn (+92% YoY) led by higher operating margin and fall in interest cost

ICICI Securities Ltd | Retail Equity Research NRB Bearings reported stellar Q1FY19 numbers. Revenues came in at | 233.9 crore, up 30.6% YoY. We estimated revenues of | 210.1 crore (17.3% YoY growth) for the quarter. We believe strong topline growth was on account of a robust performance across all segments i.e. domestic OEMs, after-markets and exports EBITDA increased 62.1% YoY to | 44.4 crore. The company reported strong EBITDA on account of a sharp increase in gross margins, 400...