Hold ABC Bearings Ltd - Q3FY12 Result Update - PPFAS

Sequential pull back in results, but margin pressure continues!

ABC Bearings Ltd. (ABCL) has reported a disappointing performance for the quarter ended December 2011 attributed mainly to the rising raw material costs.

Performance Highlights:

- Total Income and PAT for Q312 decreased by 2% and 33% Y-Y respectively

- However, on a sequential basis, revenues and PAT have increased by 19% and 5% Q-Q respectively as compared to the September 2011 reported numbers

- Though a sharp 89% Q-Q drop in other operating income has impacted the company's overall margins

- In terms of costs as a % of sales, raw material cost, staff expense and other expenditure for Dec'11 increased by 1,451bps, 20bps and 289bps to 55%, 9% and 23% respectively

- On a Y-Y basis, OPM has fallen to 17% in Q312 from 22% in Q311 which is also its lowest in the last 10 quarters

- Bottom-line was hurt on account of declining other income and a 74% Y-Y rise in finance costs.

EPS reported for the quarter ended December 2011 was Rs. 3.7/- as compared to Rs. 5.6/- for the quarter ended December 2010.

Our Call: At CMP of Rs. 99.7/- the scrip is trading at 4.9x TTM earnings of Rs. 20.3/- We recommend a HOLD.

Source : Equity Bulls

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