Religare Investment Call

Transcription

1 Q2FY18 Result Update Auto Ancillary BUY CMP (Rs) Target Price (Rs) Potential Upside Sensex Nifty % 33,219 10,303 Operational efficiency to continue ' Revenue (growth not comparable due to change in accounting standard) and Net profit increased by 16.1% and 25.2% respectively on YoY basis. As derives ~65% of its total revenue from domestic OEMs, recovery in demand in CVs and festive demand for two wheelers and PVs, led to higher revenue in Q2FY18. Also operational efficiency aided in margin expansion. We remain positive on the company and recommend a Buy. 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 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Mar-17 Research Analyst Apr-17 May-17 Jun-17 Ajay Pasari, CFA ajay.pasari@religare.com NRBBEARING Jun Jul-17 Aug-17 Ni y NRBBR:IN 9.7 1, , /100 Sep-17 Sep Oct-17 Nov-17 Q2FY18 Result Update: Total income for Q2FY18 increased by 16.1% to Rs cr compared to Rs cr led by recovery in CV sales in the second half of September post GST implementation. The sales from PV and two wheeler segments were strong on account of festive buying and inventory re-stocking. We expect overall automobile demand to remain strong in the coming quarters on both domestic and export fronts. Operational profit jumped 32.5% to Rs cr against Rs cr in the same quarter last fiscal. Operational margin surprised with 227 bps gain YoY and stood at 1% compared to 16.1% in Q2FY17, led by fall in other expenses (down 1.2% YoY). Improving product mix and operational efficiency aided in margin improvement. As a result, Net profit increased by 25.2% to Rs. 2 cr on YoY basis, led by better operational performance, falling interest cost (down 17.5% YoY) and lower depreciation expense (up 2.7% YoY). We expect PAT margin to improve further in FY18-20E, on account of strong product mix, cost rationalization measures and higher sales. Outlook & Valuation: We expect to report healthy performance over the next 2-3 years, given healthy outlook for automobile industry globally. It 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. We also expect export sales to remain strong, as global economies have seen gradual recovery in the past few quarters and may improve further in the coming quarters. 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 recommend a Buy on the stock with a target of Rs Financial Summary Particulars, Rs cr Total income APAT APATM (%) EPS, Rs RoE (%) P/E (x) FY17 FY18E FY19E , November 9, 2017

2 Q2FY18 Result Update Auto Ancillary P&L Account Quarterly Particulars, Rs cr Q2FY18 Q2FY17 Y-o-Y % Q1FY18 Q-o-Q % Net revenue Expenditure Raw material consumed Employee cost Other expenses bps bps Other income Depreciation PBIT Interest expenses PBT Exceptional items Tax Tax/PBT % 3 311bps bps PAT PATM (%) bps bps EPS

3 P&L Account Particulars, Rs cr FY17 FY18E FY19E 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 Particulars, Rs cr FY17 FY18E FY19E 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 Total assets

4 Cash Flow statement Particulars, Rs cr 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 Cash Flow from Investing Key Financial ratios FY17 FY18E FY19E Particulars, Rs cr FY17 FY18E FY19E 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 Cash from Financing Turnover ratios Net proceeds from borrowing Total Asset Ratio Dividend (incl dividend tax) Fixed Assets Ratio Interest cost Debtors Velocity Overall (Days) Inventory (Days) Cash Flow from Financing Creditors Velocity (Days) Cash Conversion cycle Net Cash Inflow / Outflow Opening Cash & Cash Equivalents GROWTH YOY% Closing Cash & Cash Equivalent 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: