ICICI Direct is bullish on NRB Bearings has recommended buy rating on the stock with a target price of Rs 215 in its research report dated February 06, 2019.
ICICI Direct's research report on NRB Bearings
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 Rs 242.6 crore, up 16.7% YoY. We estimated revenues of Rs 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 Rs 42 crore. The company reported lower EBITDA as other expenses increased 38.1% YoY. Gross margin declined marginally by 50 bps YoY. EBITDA margins came in at 17.3% vs. 19.5% YoY. • Tax rate for the quarter was at 15.5% vs. 33.6% YoY. Accordingly, PAT grew 25.7% YoY to Rs 26.8 crore.
NRB has been delivering strong double digit topline growth from past six quarters. Going forward, we expect NRB’s key segments - domestic OEMs, after markets and exports to grow at a healthy rate of 12.7%, 13% and 18% respectively. Accordingly, revenue, EBITDA and PAT are expected to grow at 14.5%, 13.3% and 13.8% CAGR, respectively, in FY18-21E. Capex plans of ~Rs 150 crore over the next two years are also on track for the company. It has also planned a capex of ~Rs 20 crore for SNL Bearings. We expect borrowings in the range of Rs 230-250 crore by FY19E. We maintain our positive stance on the company and value it at ~16x FY21E to arrive at a target price of Rs 215 per share. We have a BUY rating on the company.
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