Religare Investment Call

Transcription

1 BUY CMP (Rs) Target Price (Rs) Potential Upside Sensex Nifty Key Stock data BSE Code NSE Code Bloomberg Shares o/s, Cr (FV 2) Market Cap (Rs Cr) 3M Avg Volume 52 week H/L Shareholding Pattern (%) Promoter FII DII 1 Year relative price performance Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Research Analyst Dec Jan-17 Feb-17 Mar-17 Ajay Pasari, CFA ajay.pasari@religare.com % 31,795 9, NRBBEARING NRBBR:IN 9.7 1, , /100 Mar-17 Jun Apr-17 Ni y May-17 Jun Jul-17 Aug-17 A temporary blip; future remains bright ' Revenue increased by 2.9%; however Net profit declined % on YoY basis. 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. We expect demand revival from H2FY18 and are positive on the company. Reiterate Buy. Q1FY18 Result Update: Total income for Q1FY18 increased by 2.9% to Rs cr compared to Rs cr impacted by slowdown in domestic CV volumes and replacement sales due to uncertainty over GST implementation. We expect demand for CV segment and replacement sales to recover in H2FY18, while tractor, PV and tractors are expected to perform well. Also, exports market is expected to remain strong with recovery in developed economies and entry into new geographies. Operational profit declined 2.6% to Rs cr against Rs cr in the same quarter last fiscal. Operational margin stood at 15.3% compared to 1% in Q1FY17, depressed by surge in material cost (up 8% YoY). Net profit fell % to Rs cr on YoY basis, led by weak operational performance, higher interest cost (up % YoY) and higher depreciation expense (up 3% YoY). We expect PAT margin to improve in FY18-19E on account of strong product mix, cost rationalization measures and higher sales. Outlook & Valuation: commands ~70% market share in the needle roller bearing industry. The company caters to all segments of the automobile industry (2W, 3W, PV, CV, etc.) and derives 65% of its revenue from domestic OEMs. Also with revival in US and European economies, the demand for PV and CV has been improving in these markets, which should further improve ' exports. With the implementation of GST, the company will be in the position to capture additional market share in the aftermarket segment, which is mainly dominated by unorganized players. Thus, we remain positive on the business and reiterate a Buy on the stock with a target of Rs Financial Summary Particulars, Rs cr Total income APAT APATM (%) EPS, Rs RoE (%) P/E FY16 FY17 FY18E August 18, 2017

2 P&L Account Quarterly Particulars, Rs cr Q1FY18 Q1FY17 Y-o-Y % Q4FY17 Q-o-Q % Net revenue Expenditure Raw material consumed Employee cost Other expenses Total expenditure bps bps Other income Depreciation PBIT Interest expenses PBT Exceptional items - - Tax Tax/PBT % bps bps PAT PATM (%) bps bps EPS

3 P&L Account Net revenue Expenditure Raw material consumed Employee cost Other expenses Total expenditure Other income Depreciation PBIT Interest expenses PBT Exceptional items Tax Tax rate % PAT Share of minority interest Adjusted PAT PATM (%) EPS Balance sheet Share Capital Reserves & Surplus Total Shareholder's Fund Minority Interest Non-Current Liabilities Long term borrowings Deffered tax liability Other long term liabilities Long term provision Current Liabilities Short term borrowings Trade payables Short term provisions Other current liabilities Total liabilities Fixed Assets Deferred Tax Assets Long Term loans & advances Current Assets Current Investments Inventories Trade receivables Cash & Cash equivalents Short term loans and advances Other current assets 0.1 Total assets

4 Cash Flow statement Profit Before Tax Add: Depreciation Add: Interest cost Op profit before working capital changes Changes In working Capital Direct taxes Cash Flow From Operating Cash Flow from Investing Purchase of Fixed assets Sale of Fixed assets Cash Flow from Investing Cash from Financing Net proceeds from borrowings Dividend (incl dividend tax) Interest cost Cash Flow from Financing Net Cash Inflow / Outflow Opening Cash & Cash Equivalents Closing Cash & Cash Equivalent Key Financial ratios Dividend per share Rs Dividend Yield (%) Payout % EPS Rs Book Value per share Rs Profitability Ratios / Total income (%) PBT/Total income (%) NPM / Total income (%) ROCE (%) ROE (%) Liquidity ratios Debt-Equity Ratio Current Ratio Interest Cover Ratio Turnover ratios Total Asset Ratio Fixed Assets Ratio Debtors Velocity Overall (Days) Inventory (Days) Creditors Velocity (Days) Cash Conversion cycle GROWTH YOY% Sales Growth % Operating Profit % Net Profit Growth % VALUATION P / E Ratio P / BV Ratio EV /

5 Before you use this research report, please ensure to go through thedisclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 and Research Disclaimer at the following link : Specific analyst(s) specific disclosure(s) inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014 is/are as under: Statements on ownership and material conflicts of interest, compensation Research Analyst (RA) [Please note that only in case of multiple RAs, if in the event answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) below, are given separately] S. No. Statement Answer Tick appropriate YES I/we or any of my/our relative has any financial interest in the subject company? [If answer is yes, nature of Interestis given below this table] I/we or any of my/our relatives, have actual/beneficial ownership of one per cent. or more securities of the subject company, at the end of the month immediately preceding the date of publication of the research report or date of the public appearance? I / we or any of my/our relative, has any other material conflict of interest at the time of publication of the research report or at the time of public appearance? I/we have received any compensation from the subject company in the past twelve months? I/we have managed or co-managed public offering of securities for the subject company in the past twelve months? I/we have received any compensation for brokerage services from the subject company in the past twelve months? I/we have received any compensation for products or services other than brokerage services from the subject company in the past twelve months? I/we have received any compensation or other benefits from the subject company or third party in connection with the research report? I/we have served as an officer, director or employee of the subject company? I/we have been engaged in market making activity for the subject company? Nature of Interest ( if answer to F (a) aboveis Yes :... Name(s)with Signature(s)of RA(s). [Please note that only in case of multiple RAs andif the answers differ inter-se between the RAs, then RA specific answer with respect to questions under F (a) to F(j) above, are given below] SS.No Name(s) of RA Signatures of RA Serial Question of question which the signing RA needs to make separate declaration / answer YES Copyright in this document vests exclusively with RSL. This information should not be reproduced or redistributed or passed on directly or indirectly in any form to any other person or published, copied, in whole or in part, for any purpose, without prior written permission from RSL. We do not guarantee the integrity of any s or attached files and are not responsible for any changes made to them by any other person. Disclaimer: