NRB Bearings Ltd. share price target

NRB Bearings' Revenue increased by 2.9%; however Net profit declined 3.2% on YoY basis. NRB Bearings derives 65% of its total revenue from domestic OEMs and was impacted by slowdown in the domestic CV industry and replacement market sales. However, it reported positive growth in PVs, tractors and two wheelers OEM sales.

ICICI Securities Ltd | Retail Equity Research NRB Bearings reported weak Q1FY18 numbers. The company reported topline, EBITDA and PAT, which were below our estimates Revenues came in at | 179.2 crore, up 2.6%YoY. We estimate revenues of | 196.1 crore for the quarter EBITDA declined 6.5% YoY to | 27.4 crore. The company reported subdued EBITDA on account of a sharp increase in other expenses. Other expenses increased to | 41.4 crore in Q1FY18 vs. | 28.9 crore...

Moderate growth with healthy margins: In Q1FY18, standalone sales grew at a moderate 4.4% sequentially and 3.0% YoY to reach Rs. 1970Mn and EBITDA, EBIT & PAT have been quite reflective of the flat growth. Material expenses as % of revenue contracted by 113bps and stood at 37.8% vs 38.9% QoQ. While employee expenses to sales recorded an improvement of 30bps, other expenses as % of sales have eased impressively to 21.0% vs 28.1% QoQ recording an improvement of 712bps.

Maintain BUY with a target price of Rs 161 (22x FY19E EPS). NRBs 1Q net revenue came in at Rs 1.79bn (+3% YoY). The company witnessed strong growth in 2W and tractor segment, which was offset by subdued CV and replacement volumes. EBITDA at Rs 274mn, with margin at 15.3% (-87bps, +102 bps QoQ) was in-line with estimates. Higher RM cost (+217ps YoY) was partially offset by lower other expenses (-65bps YoY) and employee expenses (-65bps YoY). PAT came in at Rs 127mn (-3% YoY).

Decent growth recorded with healthy margins: Standalone sales grew at an impressive 13.9% sequentially and 9.5% YoY to reach Rs. 1887Mn and EBITDA has recorded an improvement of 35.2% QoQ and reached Rs. 270Mn. EBITDAmargin has expanded by 225 bps QoQ to 14.3% in Q4FY17 mainly due to lower raw material and employee expenses. EBIT and PAT margins have also expanded by 263 bps & 225 bps during the same period to reach 10.4% & 6.9% respectively.

NRB 4Q net revenue came in at Rs 1.88bn ( 10% YoY, 14% QoQ), owing to growth in the domestic automotive sector and revival in export revenue. EBITDA at Rs 270mn, with margin at 14.3%(-361 bps YoY, 225bps QoQ) was in-line with estimates.

NRB Bearings reported in-line Q4FY17 numbers. Revenue and Net profit increased by 9.5% and 8.1% respectively on YoY basis. NRB Bearings derives 65% of its total revenue from domestic OEMs, 20% from exports to companies like Daimler, Audi, etc. and balance from aftermarket segment. We remain positive on the company, which is likely to benefit from demand from automobile industry and GST implementation.

ICICI Securities Ltd | Retail Equity Research NRB Bearings reported weak operating numbers for Q4FY17. Though topline and bottomline numbers came in line with our estimates, EBITDA came in significantly below our estimates due to a sharp increase of 105.9% in other expenses. Thus, absolute EBITDA witnessed a drop of 12.6% YoY. PAT numbers witnessed a jump on account of one-time refund of duty' (reported in other income) Revenues came in at | 188.7 crore up 9.5%YoY and in line with our...

We expect revenue CAGR at 12% and PAT CAGR at 23% over FY17-FY19E. This is owing to growth in the domestic automotive sector, incremental revenue from the Defence, Aerospace and Railway segments (aggregate ~Rs 600mn by FY19E) and a revival in exports. We assign a BUY rating to the stock, with a target price of Rs 161 (22x FY19E EPS).

Flat Revenue with Margins Under Strain: Standalone sales de-grew at 7.8% sequentially, however, have grown at 4.4% YoY standing at Rs. 1657 mn and EBITDA declined by 29.7%/ 1.6% QoQ/ YoY during this quarter to Rs. 199 mn and EBITDA margin contracted by 375 bps,73 bps QoQ/ YoY, to 12.0% in Q3FY17 mainly due to higher raw material and growing employee expenses.