NRB Bearings - Forex headwinds and GST arrested revenue growth: CRISIL

CRISIL has come out with its report on NRB Bearings. The research firm has assigned a fair value of Rs 135 per share. However, retained fundamental grade of 4/5 to the company.

October 10, 2017 / 17:26 IST

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CRISIL's research report on NRB Bearings

NRB Bearings Ltd’s (NRB’s) Q1FY18 standalone earnings were broadly in line with CRISIL Research’s expectations. Standalone revenue grew a moderate 2.9% y-o-y to Rs. 1,792 mn, as healthy export volumes were partly offset by the appreciating rupee. EBITDA margin contracted 87 bps y-o-y to 15.3% owing to lower net realisations because of forex headwinds and lower aftermarket sales, which typically fetch superior margins. Consequently, with depreciation, finance costs and other income being broadly stable, PAT declined 3.2% y-o-y to Rs. 127 mn. Given NRB’s diversified presence across various automobile segments, it is well placed to benefit from the upbeat domestic auto market and gradual revival in the global auto industry. Its growing non-automotive customer base on the back of strong research and engineering capabilities is expected to support growth. We maintain the fundamental grade of 4/5.

We maintain our revenue and earnings estimates. Subsequently, we retain our DCF-based fairvalue at Rs. 135 per share, which implies P/E multiples of 21.7x FY18E and 17.5x FY19E EPS. At the current market price of ₹122, our valuation grade is 4/5.

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