Net sales grows by 23% YoY in Q4FY07

NRB Bearings Ltd (NRB) reported net sales growth of 23% YoY to Rs845mn in Q4FY07 as against Rs686mn for Q4FY06, backed by growth in motorcycle segment, commercial vehicles, replacement market and others. For FY07 NRB’s sales grew by 19% YoY to Rs3031mn backed by growth from OEMs demand and replacement demand.

EBITDA margins improves by 88bps YoY in Q4FY07

NRB’s EBITDA for Q4FY07 grew by 28% YoY to Rs205mn as against Rs160mn for Q4FY06 and EBITDA margins improved by 88bps YoY to 24.2%. It is noteworthy that NRB improved its margins the rising cost of raw materials. For FY07 NRB’s EBITDA grew by 22% YoY to Rs748mn and EBITDA margins improved by 52bps YoY to 24.7% Interest cost for Q4FY07 went up by 76% YoY to Rs9.5mn as against Rs5.4mn in Q4FY06. NRB expanded its manufacturing capacities across the products in FY07 and it had raised debts for the same and due to which interest cost went up by 76% YoY. NRB reported impressive jump in net profit in Q4FY07 by 42% YoY to Rs115mn. For FY07 its net profit grew by 17% YoY to Rs398mn and an EPS of Rs.8.2.

Business Outlook and Valuation –

NRB is the fourth largest player in domestic bearing industry. It enjoys 70% market share in needle bearings segment. NRB is a Tier I supplier to large domestic OEMs like Tata Motors, Maruti, Ashok Leyland, Mahindra & Mahindra, Force Motors, Bajaj Auto, LML,etc catering largely to the Automotive segment and within this servicing the motorcycle segment which is witnessing healthy volume growth. Going forward, we expect auto industry continue to grow at 10-12% for next 2-3 years. NRB continues to report impressive margins of 25% which are the highest among its peers.