Q3FY21 Result Update - NRB Bearings - ICICI Direct

NRB Bearings posted robust numbers that were largely above our estimates on all parameters. Margins expanded on the back positive operating leverage. Revenue for the quarter came in at Rs. 244.7 crore, up 33.7% YoY (vs. I-direct estimate of Rs. 220 crore). We expect the robust growth to be attributable to festive uptick and pent up demand. Gross margins expanded 20 bps but EBIDTA margins improved ~680 bps to 17.6%. NRB registered an absolute EBIDTA of Rs. 43.1 crore, up 117.7% YoY. Other expenses increased 18.7% YoY to Rs. 70.6 crore whereas employee cost grew 12.7% YoY to Rs. 38.5 crore. Ensuing PAT came in at Rs. 23.3 crore, up 121.3% YoY. Tax rate for the quarter was at 29.8%.

Valuation & Outlook

NRB's performance is largely correlated to the domestic auto segment as ~70% of the topline comes from domestic OEMs. The past two quarters showed signs of a strong recovery. Further auto volumes in January also came in strong. Also, even with a rise in steel prices, we expect NRB to emerge with EBIDTA margins of 15.7% for FY22E & FY23E led by positive operating leverage. We introduce FY23E and build in revenue, EBIDTA and PAT CAGR of 8.9%, 22.3% and 36.5%, respectively, in FY20-23E. We estimate an EPS of Rs. 8.4/share for FY23E that implies earnings yield of 7% at CMP. Reflecting the improved outlook for NRB, we upgrade the target price to Rs. 150/share (earlier Rs. 110) and maintain our BUY rating on the stock.

For details, click on the link below: https://www.icicidirect.com/mailimages/IDirect_NRBBearings_Q3FY21.pdf

Shares of NRB BEARINGS LTD. was last trading in BSE at Rs.117.5 as compared to the previous close of Rs. 118.05. The total number of shares traded during the day was 42275 in over 956 trades.

The stock hit an intraday high of Rs. 119.7 and intraday low of 116.45. The net turnover during the day was Rs. 4984737.

Source : Equity Bulls

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