This Small Cap Auto Ancillary Stock Gets "Buy" Call, Anand Rathi Sees Strong 27% Upside

NRB Bearings Ltd (NRBBEARING) - Stock Performance

The stock of NRBBEARING currently trading at Rs 137.70 apiece on NSE. The stock has fallen 2.79% in 1 week, 5.47% in 1 month and 7.38% in 3 months, respectively. It has given 14.63% positive return in 1 year and 67.17% positive return in 3 years, respectively. It has fallen 15.02% in 5 years.

It recorded its 52 week high on 15 September 2022 at Rs 186 apiece and 52 week low on 26 May 2022 at Rs 108 apiece, respectively. It has a market capitalisation of Rs 13,27.84 crore.

Result Update - Q3FY23

Revenues increased by 8.83% in Q3FY23 to Rs.2,511 million. NRB reported strong performance due to a sharp focus on fundamental business operations and an upsurge in demand across all vehicle segments within the automobile industry. The e-vehicle segment witnessed a boost in business, particularly from exports.

EBITDA jumped by 17.45% and margins improved by 100bps in Q3FY23, mainly because of improved margins by a combination of price increase and operational efficiency. Logistics cost improved in the last quarter resulting in saving in the costs. Cost reduction measures have shown results and led to improved Cost of Goods Sold.

PAT increased by 38.19% in Q3FY23 to Rs.234 million led by enhanced product mix and high margins for export sales to Europe and North America for high end new platforms including hybrid and E-mobility.

For the nine month Revenues up by 8.2% to Rs.7,447 million. EBITDA increased by 4.3% on YoY to Rs.1,078 million with margins clock at 14.5%. PAT up by 16.8% to Rs.612 million as compared to last year same period was Rs.524 million.

Buy For a target price of Rs 174 apiece

According to Anand Rathi, "The bearing market in India is gaining significant importance due to the upscaling use of bearing in motors. Additionally, growing automotive electrification, accompanied by the rising initiatives by the Indian government, including 'Make in India' and 'Aatmanirbhar Bharat', will escalate the growth of the India bearing market. NRB is well positioned to capture market share with our expanded product portfolio in the E-Mobility/EV segment."

It added, "NRB's focus and embracing of future technologies along with re-inventing and altering its capabilities has led the Company to supplying the world's foremost E-Vehicles. We valued NRB at Rs 174 i.e. 17x P/E on FY24E EPS. We maintain a BUY on NRB Bearings Limited."

Disclaimer

The stock has been picked from the brokerage report of Anand Rathi. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.