Buy NRB Bearings; target of Rs 110: ICICI Direct
ICICI Direct is bullish on NRB Bearings recommended buy rating on the stock with a target price of Rs 110 in its research report dated December 17, 2020.
December 17, 2020 / 03:47 PM IST
ICICI Direct's research report on NRB Bearings
NRB registered a rebound in its Q2 performance led by improved production levels at domestic OEMs on account of festive stocking. The performance was further aided by higher exports and strong traction in tractors. Revenue for Q2 came in at Rs 197.7 crore, down 4.6% YoY (vs. I-direct estimate of Rs 195.8 crore). Gross margins expanded sharply by ~610 bps. Consequently, EBIDTA margins improved ~530 bps to 15.4%. NRB registered absolute EBIDTA of Rs 30.4 crore, up 60% YoY. Even though tax rate for the quarter was at 34.7%, ensuing PAT came in at Rs 11 crore after adjusting for minority interest. During H1FY21, NRB generated CFO to the tune of ~Rs 63 crore. Further, debt reduced by ~ Rs 58 crore during H1.
We estimate an EPS of Rs 7.4/share for FY23E, implying earnings yield of 8% at the CMP. Reflecting the improved outlook for NRB, we upgrade the stock from HOLD to BUY ascribing a 15x multiple to FY22E EPS to arrive at a target price of Rs 110/share.
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