Views on FAG Bearings 4QCY2013 results - Angel Broking

Views of Mr. Yaresh Kothari (Research Analyst - Auto Ancillary, Angel Broking) on FAG Bearings 4QCY2013 results:

Fag Bearings reports mixed results

"FAG Bearings (FAG) posted mixed results for 4QCY2013 with top-line coming in slightly ahead of our expectations; while, EBITDA margins were lower-than-expected (down 108bp qoq to 12.4%) largely due to raw-material cost pressures. Bottom-line, however, was ahead of our expectations led by significant increase in other income. The top-line posted a strong growth of 7% qoq to Rs. 403cr, which was slightly ahead of our expectations of Rs. 388cr. The strong growth in the top-line was despite the weakness in the automotive and the industrial sectors which are the key growth drivers of the company. EBITDA margins declined sequentially (down 108bp qoq) to 12.4%, lower than our expectations of 13.9%, primarily due to raw-material cost pressures and sharp increase in other expenditure. Consequently, operating profit and net profit declined 1.6% and 2.7% qoq to Rs. 50cr and Rs. 35cr respectively. On a yoy basis though, net profit surged 17.6% led by strong top-line growth of 16% and aided further by sharp increase of 64.4% in other income. At the CMP, the stock is trading at 12.7x CY2015E earnings. We maintain our positive stance on FAG, considering its strong parentage, debt-free status and cash balance worth Rs. 143/ share on the books. We maintain our Accumulate rating on the stock with a target price of Rs. 1,751."

Fag Bearings 4QCY2013 Result Review (CMP: Rs. 1,594/ TP: Rs. 1,751/ Recommendation: Accumulate)

Source : Equity Bulls

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