Buy NRB Bearings; target of Rs 215: ICICI Direct

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26 Aug, 2025 12:21

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ICICI Direct's research report on NRB Bearings

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 bps YoY. Employee expenses grew only 6.8% YoY. Accordingly, EBITDA margins came in at 19% vs. 15.3% in Q1FY18. We estimated margins of 17.3% for the quarter Other income witnessed a sharp jump of 75% YoY. Non-operating expense like depreciation declined 4.7% YoY. The company also reported an exceptional income of | 16.5 crore due to sale of property during the quarter. Accordingly, PAT increased strong 173.9% YoY to | 34.8 crore.

Outlook

Aided by a strong operational performance, NRB has repaid | 90 crore of debt in FY18. D:E is now at a healthy 0.4x. NRB currently operates at utilisation levels of over 80%. With growth momentum expected to continue, NRB has outlined a capex plans of | 70-100 crore over the next two to three years. It has also planned a capex of ~| 20 crore for SNL bearings. With upbeat growth outlook in its key segments – domestic OEMs, after markets and exports, we expect these segments to grow at a healthy rate of 15%, 15% and 22%, respectively. Accordingly, revenue, EBITDA and PAT are expected to grow at 17.7%, 12.3% and 13.2% CAGR, respectively, in FY18-20E. Thus, we continue our positive stance on the company and maintain the target price of | 215 per share (~18x FY20E EPS). We have a BUY recommendation on the company.

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