Hold NRB Bearings; target of Rs 85: ICICI Direct
ICICI Direct’s research report on NRB Bearings
NRB Bearings reported a weak performance across all operational parameters. Standalone revenues came in at rs 208 crore, down 11.1% YoY. The decline was driven by a weak performance in domestic OEM segment. EBITDA margin declined ~680 bps to 12.2% (vs. 19% in Q1FY19) mainly impacted by 365 bps increase in input costs and negative operating leverage amid declining topline. Accordingly, absolute EBITDA declined 42.7% YoY to rs 25.5 crore. Finance costs rose 33.1% YoY while other income declined 56.1% YoY. Accordingly, PAT declined 75% YoY to rs 8.7 crore.
On the whole, RoCEs are expected to decline to 15% in FY21E. We value NRB at ~12x FY21E earnings to arrive at a target price of rs 85 per share. We have a HOLD recommendation on the company.
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