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 130 125 120 115 110 105 100 95 90 85 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Research Analyst Dec-16 54.7 19.3 14.9 1 Jan-17 Feb-17 Mar-17 Ajay Pasari, CFA ajay.pasari@religare.com 118 139 17.8% 31,795 9,904 530367 NRBBEARING NRBBR:IN 9.7 1,144 120,500 157/100 Mar-17 Jun-17 54.7 19.1 14.7 11.5 Apr-17 Ni y May-17 Jun-17 5 19.3 1 11.0 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. 179.2 cr compared to Rs. 174.1 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. 27.4 cr against Rs. 28.3 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. 12.7 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. 139. Financial Summary Particulars, Rs cr Total income APAT APATM (%) EPS, Rs RoE (%) P/E FY16 FY17 FY18E 675 728 819 933 110 42 15.8 2 119 52 1 22.1 136 62 18.6 161 80 8.2 1 14.5 August 18, 2017
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 179.2 8 28.9 4 151.7 174.1 7 29.3 4 146.0 2.9 8.0-3.9 188.7 80.4 28.3 53.1 161.7-5.1 2.3-22.0-27.4 28.2-2.6 27.0 1.7 15.3 1-87 bps 1 102 bps Other income 16.1 19.5 Depreciation 7.4-3.0 7.4-2.2 PBIT 21.8 22.1-4.2 Interest expenses 3.4 3.6-5.5 PBT 18.4 18.9-2.9 Exceptional items - - Tax 5.7 5.8-2.1 3 Tax/PBT % 31.0 30.7 25 bps 25.1 587 bps PAT 12.7 13.1-13.0-2.1 PATM (%) 7.1-44 bps 6.9 22 bps EPS - -2.1
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 674.9 259.8 128.4 176.3 564.5 11 31.9 81.7 17.8 20.7 32.4 4-42.0 72 272.0 130.2 206.1 608.3 119.3 7.8 31.8 95.3 20.1 75.3 21.7 53.5-52.2 818.6 309.5 144.5 228.8 682.8 135.7 8.6 36.6 107.7 16.5 9 27.4-62.5 933.1 353.8 161.9 25 771.9 16 9.6 39.6 13 15.1 11 34.8 8-79.7 8.2 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 259.8 279.2 4.1 8 61.8 11.7 7.1 5.8 362.3 17 89.9 93.8 732.0 263.8 22.4 297.7 317.1 5.5 132.6 10 12.7 28 157.3 104.6 2 742.8 255.3 43.5 336.8 35 6.7 11 86.0 12.0 6.6 6.8 292.7 149.4 116.1 25.6 767.0 249.6 4 386.8 40 101.0 73.1 1 299.6 141.9 130.1 1.8 25.8 81 241.0 40.9 Current Assets 445.2 443.5 476.1 53 Current Investments Inventories 144.7 172.3 189.5 214.2 Trade receivables 226.0 22 247.7 282.4 Cash & Cash equivalents 32.0 22.6 Short term loans and advances 42.5 26.3 26.9 28.2 Other current assets 0.1 Total assets 731.9 742.8 76 813.6
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 31.9 17.0-4.1 108.8 4.2-21.0 91.9-19.2 0.3 9.4-9.6-29.4-28.1-15.5-5.7-78.7 3.6 27.7 3 75.3 31.8 20.1-5.0 122.1-83.8-21.7-19.3-4.0-23.3 2-20.1-8.4-0.9-3 23.7 9 36.6 16.5 14-28.6-27.4 88.4-3 -0.9-30.9-29.4-23.4-16.5-69.2-11.8 22.6 11 39.6 15.1 170.8-45.3-34.8 90.7-3 -1.0-31.0-20.4-29.8-15.1-65.2-5.5 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 % 1.5 34.0 28.8 9.5 15.5 15.8 0.8 4.6 0.9 2.6 115.1 83.5 48.4 150.2 0.7-10.2-19.6 26.0 32.7 10.3 17.4 1 0.8 1.5 4.7 1.0 2.9 112.2 79.5 48.8 142.9 7.8 8.0 23.9 2.0 1.7 30.7 36.7 1 18.4 18.6 0.7 6.5 3.4 104.6 80.7 49.2 136.0 12.5 13.7 2.5 2.1 30.6 8.2 41.9 12.4 2 1.8 8.7 4.0 103.7 78.9 48.1 134.5 14.0 18.8 27.3 VALUATION P / E Ratio P / BV Ratio EV / 2 4.1 12.3 22.1 1 14.5 3.6 2.8 11.7 10.1 8.4
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