nrb bearings (nrbbea) | 119content.icicidirect.com/mailimages/idirect_nrbbearings_q1fy18.pdf · nrb...
TRANSCRIPT
August 17, 2017
ICICI Securities Ltd | Retail Equity Research
Result Update
Weak performance, maintain HOLD…
NRB Bearings reported weak Q1FY18 numbers. The company
reported topline, EBITDA and PAT, which were below our estimates
Revenues came in at | 179.2 crore, up 2.6%YoY. We estimate
revenues of | 196.1 crore for the quarter
EBITDA declined 6.5% YoY to | 27.4 crore. The company reported
subdued EBITDA on account of a sharp increase in other expenses.
Other expenses increased to | 41.4 crore in Q1FY18 vs. | 28.9 crore
in Q1FY17, up 43.1% YoY. Accordingly, EBITDA margins came in at
15.3% vs. 16.8% in Q1FY17. We estimate margins of 16.5% for the
quarter. Employee expenses remained flat YoY at | 28.9 crore
PAT declined 10%YoY to | 12.7 crore. We estimate PAT of | 15.8
crore for the quarter
Leading bearings manufacturer with focus on cylindrical & needle bearing
NRB is the leader in the needle bearing segment in India with ~70%
market share. Needle roller bearings comprised ~55% of NRB’s topline in
FY14. A needle roller bearing, as a customised product, requires NRB to
work with OEMs from the conceptualisation stage. This enables it to build
sticky clientele relationships with almost all major OEM players. Apart
from needle bearings, cylindrical bearings are the other key product with
needle and cylindrical bearings together forming ~68% of the topline.
Performance from export business to drive growth over FY17-19E
To expand its geographical footprints and foray into newer platforms,
NRB has forayed into exports wherein it caters to global players such as
Daimler, Renault, Volvo and Getrag. NRB’s exports, which grew at 11%
CAGR in FY13-17, have also provided a natural hedge for its import of raw
materials. Exports, which formed 22% of the topline in FY12, constituted
~18% of revenues in FY17. We expect export revenues to grow at 9%
CAGR in FY17-19E to | 157.9 crore.
Topline growth likely to accelerate on recovery in auto, after-markets
While FY17 witnessed a slight recovery in auto volumes, we believe the
same will gain traction in FY17-19E. We estimate the auto industry will
grow at 6-8% CAGR in FY17-19E. Accordingly, we expect bearings
demand from OEM segment to grow at 8% CAGR in FY17-19E. Similarly,
we expect business from after-market segment to grow at a CAGR of 7%
over FY17-19E. Thus, we expect the OEM and after-market segments to
clock revenues of | 562.5 crore and | 107.1 crore, respectively.
Maintain HOLD recommendation
We marginally revise our earnings estimate upwards to account for better
growth of FY18 and FY19. Thus, we now estimate topline and bottomline
growth of 8.6% and 10.6% CAGR, respectively, in FY17-19E. With
moderate capex of ~| 50 crore in FY18E-19E, we believe NRB is well
placed to capitalise on the next phase of growth. We continue to value
the company at 19x FY19E EPS of | 6.8 to arrive at a target price of | 130.
We continue to have a HOLD recommendation on the company.
NRB Bearings (NRBBEA) | 119 Rating matrix
Rating : Hold
Target : | 130
Target Period : 12 months
Potential Upside : 9%
What’s changed?
Target Changed from | 123 to | 130
EPS FY18E Changed from | 5.9 to | 6.1
EPS FY19E Changed from | 6.5 to | 6.8
Rating Unchanged
Quarterly performance
Q1FY18 Q1FY17 YoY (%) Q4FY17 QoQ (%)
Revenue 179.2 174.6 2.6 188.7 (5.1)
EBITDA 27.4 29.3 (6.5) 27.0 1.7
EBITDA (%) 15.3 16.8 -149 bps 14.3 102 bps
PAT 12.7 14.1 (10.0) 13.0 (2.0)
Key financials (Consolidated)
| Crore FY16 FY17 FY18E FY19E
Revenue 674.9 727.6 795.2 858.3
EBITDA 112.6 119.4 130.4 141.0
Net Profit 42.0 54.0 59.1 66.2
EPS (|) 4.3 5.6 6.1 6.8
Valuation summary (Consolidated)
FY16 FY17 FY18E FY19E
P/E (x) 27.5 21.3 19.5 17.4
Target P/E 30.0 23.3 21.3 19.0
EV/EBITDA 12.1 11.7 10.5 9.5
P/BV 4.1 3.6 3.3 2.9
RoE (%) 15.0 17.0 16.8 16.7
RoCE (%) 16.0 16.1 17.8 18.1
Stock data
Particular Amount
Market Capitalization 1,153
Total Debt (FY17) 265
Cash and Investments (FY17) 23
EV (FY17) 1,359
52 week H/L (|) 157 / 103
Equity capital 19.4
Face value (|) 2.0
Price performance
1M 3M 6M 12M
NRB Bearings (16.3) (5.4) (1.9) (2.7)
Schaeffler India (7.2) (7.1) 3.5 8.0
SKF India (4.6) (4.7) 7.1 8.6
Timken India (9.9) (4.5) 7.5 24.3
Research Analyst
Chirag J Shah
Sagar Gandhi
ICICI Securities Ltd | Retail Equity Research Page 2
Variance analysis
Year Q1FY18 Q1FY18E Q1FY17 YoY (%) Q4FY17 QoQ(%) Comments
Income from Operation 179.2 196.1 174.6 2.6 188.7 (5.1) Muted topline growth due to GST impact in the after-market
segment of the business
Other Income 1.6 1.6 1.4 17.8 1.3 19.5
Total Income 180.7 197.7 176.0 2.7 190.0 -4.9
Cost of materials consumed 74.5 78.5 70.9 5.1 73.5 1.4
Change in inventories 6.9 4.9 4.5 53.9 6.9 0.7
Employee cost 28.9 32.2 28.9 0.1 28.3 2.3
Other expenses 41.4 32.2 28.9 43.1 53.1 (22.0)
EBITDA 27.4 32.4 29.3 (6.5) 27.0 1.7
EBITDA Margin (%) 15.3 16.5 16.8 -149 bps 14.3 102 bps Subdued margins on account of sharp increase in other expenses
Depreciation 7.2 7.4 7.4 (3.1) 7.4 (2.2)
Interest 3.4 3.3 3.2 6.2 3.6
PBT 18.4 23.3 20.0 (8.2) 17.3 6.3
Taxes 5.7 6.9 5.9 (4.0) 4.3 31.1
PAT 12.7 16.3 14.1 (10.0) 13.0 (2.0) Consequently, PAT declined 10% YoY
Source: Company, ICICIdirect.com Research
Change in estimates
FY17 FY18E FY19E
(| Crore) Old New % Change Old New % Change
Revenue 727.6 796.1 795.2 (0.1) 844.3 858.3 1.7
EBITDA 119.4 131.2 130.4 (0.6) 139.5 141.0 1.1
EBITDA Margin (%) 16.4 16.5 16.4 -10 bps 16.5 16.4 -7 bps
PAT 54.0 57.3 59.1 3.2 62.8 66.2 5.4
EPS (|) 5.6 5.9 6.1 3.4 6.5 6.8 5.0
Source: Company, ICICIdirect.com Research
Assumptions
| crore FY17 FY18E FY19E FY18E FY19E
Domestic OEMs 482.2 520.8 562.5 443.0 469.5
After market sales 93.5 100.1 107.1 120.1 126.1
Exports 132.9 144.9 157.9 202.6 216.8
Current Earlier
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 3
Company Analysis
Strong client relations to drive growth
Presence across major OEM players, new segments to open up
opportunities
NRB is present across the auto OEM space through its exposure to the
two-wheelers, four-wheelers, commercial vehicles (CV), passenger
vehicles (PV) and off-highway segments. With a proven track record over
50 years, it is a preferred supplier to leading domestic OEMs such as Hero
MotoCorp, Bajaj Auto, Maruti Suzuki, Tata Motors, Ashok Leyland, etc.
which is clearly depicted in the staggering 70% market share commanded
by the company in the needle roller bearings space. A needle roller
bearing is a customised product. Hence, the company works with OEMs
from the conceptualisation stage to provide anti-friction solutions. This
enables NRB to build a sticky clientele relationship with major OEM
players.
Apart from the automotive segment, the company also enjoys a presence
in the race boats segment wherein Ingersoll Rand is one of the key
customers. Furthermore, NRB has also outlined growth opportunities in
other mobility segments such as defence in the form of gun carriers,
marine, Railways and MRTS wherein rising investment could open up
avenues for bearings demands.
NRB, whose domestic automotive segment, forms ~62% of the topline,
caters to almost all segment viz. two-wheelers (33% of revenues), CV
(19% of revenues), PV (20% of revenues) and farm/off highway (forming
10% of revenues). Domestic automotive OEM revenues of NRB have
grown at 7.2% CAGR during FY10-16 to | 383 crore.
Exhibit 1: Key customers of NRB
Category Key customers
Two-wheeler OEMs Hero MotoCorp, HMSI, Bajaj Auto, TVS Motor
PV Maruti Suzuki, Tata Motors
CV/Utility vehicle Mahindra & Mahindra, Ashok Leyland
Source: Company, ICICIdirect.com Research
Diversified client base helps diversify risk
NRB’s client portfolio is well diversified with the average share of the top
customer over FY09-16 at ~10% of revenues.
The contribution of NRB’s top 10 clients is at ~54% of the topline. The
company also indicated that the constituents of the top 10 keep on
changing based on the individual segmental growth.
Automotive segment recovery to boost demand…
NRB OEM segment moves in tandem with industry sales volumes…
Revenue growth of NRB’s auto segment has mimicked overall auto sales
volumes. It is noteworthy, for the year, auto volumes jumped sharply.
NRB had shown a similar sharp uptick. For example, in FY10 and FY11,
when overall auto volumes grew ~25% and 26% YoY, NRB’s auto
segment grew ~34% and ~38% YoY, respectively. Similarly, during the
challenging times for the automotive segment (muted 2% and 4% YoY
growth in FY13 and FY14, respectively), NRB’s auto segment declined at
4.3% and 1.2% YoY in FY13 and FY14, respectively, exhibiting a strong
correlation. With the auto industry again showing signs of traction in
FY17, we believe the recovery will now be visible from FY18E-19E.
Accordingly, we now expect total revenues to grow at 8.6% CAGR in
FY17-19E to | 858 crore.
A needle roller bearing is a customised product. Hence, the
company works with OEMs from the conceptualisation
stage to provide anti-friction solutions
ICICI Securities Ltd | Retail Equity Research Page 4
NRB’s domestic OEMs set to grow at ~8% CAGR over FY17-19E
We expect net revenues from the OEM segment to grow at a moderate
8% CAGR during FY17-19E to | 562.5 crore, factoring recovery in the auto
space over FY18E & FY19E.
We highlight that our revenue assumption for NRB’s domestic OEM
segment is largely based on the overall domestic auto growth
assumptions of 6-8% CAGR during FY17-19E. Furthermore, we also
derive comfort from the huge launch pipeline in four-wheelers (over 20
launches/refreshes in the next two years) and two-wheelers space (over
35 launches/refreshes in the next two years).
Exhibit 3: NRB OEM segment revenues trend
442
482
521
562
8.08.0
3.53.5
0
100
200
300
400
500
600
FY16 FY17 FY18E FY19E
| c
rore
-5
-3
-1
1
3
5
7
9
(%
)
Domestic OEMs YoY (%)
Source: Company, ICICIdirect.com Research
De-risked geographical presence through exports…
To expand its footprint and foray into newer platforms, NRB has focused
on exports wherein it caters to global players such as Daimler Trucks,
Renault, Volvo and Getrag. With a focus on exports, the company has
demonstrated a strong exports performance. Its export revenues have
grown at 31.5% CAGR over FY09-16. The company’s export, which
formed ~15% of topline in FY09, constituted ~25% of revenues in FY17,
thus enabling NRB to combat the domestic slowdown.
According to the company, its focus on exports by the way of working
from the conceptualisation stage given its customised product offerings
has enabled it to strengthen its foothold in the export market. Given the
fact that NRB is one of the few global players (INA, Koyo and NSK)
Exhibit 2: Auto sales growth, NRB auto OEM segment revenue growth trend
11.6
-4.3
-1.2 2.9 3.5
3.5
8.08.0
14.2
1.94.0
8.4
2.8
7.0
2.5
3.0
-25
-15
-5
5
15
25
35
45
FY12 FY13 FY14 FY15 FY16 FY17 FY18E FY19E
(%
)Auto OEM Segment (YoY) Auto Volumes (YoY)
Source: Company, Bloomberg, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 5
producing needle roller bearings coupled with the technology at par with
MNCs, export earnings are expected to remain robust.
Going ahead, we expect NRB’s export revenues to grow at 9% CAGR
over FY17-19E. Consequently, the share of export revenues is expected to
contribute ~19% of revenues in FY19E.
Exhibit 4: NRB export revenue trend
167.1
129.9 132.9
144.9
157.9
20.5
-22.2
2.3
9.09.0
0
20
40
60
80
100
120
140
160
180
FY15 FY16 FY17 FY18E FY19E
| c
rore
-25
-20
-15
-10
-5
0
5
10
15
20
25
(%
)
Exports YoY (RHS)
Source: Company, ICICIdirect.com Research
Exhibit 5: Exports as percentage of topline
19.518.5 18.9 19.1
0
5
10
15
20
25
30
35
FY16 FY17 FY18E FY19E
(%
)
Exports
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 6
Consolidated revenues to grow at 8.6% CAGR during FY17-19E
Exhibit 6: Expect overall consolidated revenue growth of 8.6% CAGR in FY17-19E revenue trend
675
728
858
795
-
160
320
480
640
800
960
FY16 FY17 FY18E FY19E(|
crore)
Source: Company, ICICIdirect.com Research
Exhibit 7: Share of exports to rise with robust export growth
19.5 18.5 18.9 19.1
66.2 67.0 68.0 68.0
13.0 13.0 13.1 12.9
0
10
20
30
40
50
60
70
80
90
100
FY16 FY17 FY18E FY19E
(%
)
Exports Domestic OEM Aftermarket
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 7
EBITDA to grow at 8.7% CAGR in FY17-19E
We expect operating profit to grow at 8.7% CAGR over FY17-19E. We
also expect margins to inch higher over FY17-19E due to higher
contribution from exports. Accordingly, we expect margins to remain
stable at 16.4% in FY19E.
Exhibit 8: EBITDA growth trend
112.6
130.4
141.0
119.4
16.716.4 16.4 16.4
-
20
40
60
80
100
120
140
160
FY16 FY17 FY18E FY19E
(|
crore)
10
13
16
19
(%
)
EBITDA Margin (RHS)
Source: Company, ICICIdirect.com Research
PAT expected to grow at 10.6% CAGR in FY17-19E
We estimate PAT of | 66.2 crore for FY19E.
Exhibit 9: Consolidated earnings trend
42.0
54.0
59.1
66.2
6.2
7.4
7.47.7
-
10
20
30
40
50
60
70
FY16 FY17 FY18E FY19E
(|
crore)
-
3
6
9
12
(%
)
PAT Margin (RHS)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 8
Outlook and valuation
NRB has been a key player in the domestic bearings industry considering
its leadership position in needle roller bearings. Being an automotive
centric supplier with customised product offerings, the company also
enjoys a sticky client relationship like its MNC peers such as SKF, FAG
and Timken and has a presence across all leading OEM players in India.
NRB has consistently demonstrated a handsome financial performance
with revenues and earnings CAGR of 11.2% and 11.6%, respectively, in
FY10-16. Going ahead, with the overall improvement in the economy and
other macro factors such as easing of inflation and lowering of interest
rates, automotive volumes are expected to bounce back. NRB, being an
important player in the automotive bearings space with a leadership
position in needle roller bearings, is expected to be a key beneficiary. We
also expect export revenues to grow at 7% CAGR in FY17-19E as the
company continues to expand its footprint in newer geographies.
While we continue to believe that NRB would be one of the key
beneficiaries of a recovery in automotive sector and given its leadership
position in needle roller bearings space. Accordingly, we estimate topline
and bottomline growth of 8.6% and 10.6% CAGR over FY17-19E. With
moderate capex of ~| 50 crore in FY18E-19E, we believe NRB is well
placed to capitalise on the next phase of growth. We continue to value
the company at 19x FY19E EPS of | 6.8 to arrive at a target price to | 130.
We continue to have a HOLD recommendation on the company.
ICICI Securities Ltd | Retail Equity Research Page 9
Recommendation history vs. consensus
0.0
20.0
40.0
60.0
80.0
100.0
120.0
0
20
40
60
80
100
120
140
160
180
Aug-17Jun-17Mar-17Jan-17Oct-16Aug-16May-16Mar-16Jan-16Oct-15Aug-15
(%
)
(|)
Series1 Idirect target Consensus Target Mean % Consensus with BUY
Source: Bloomberg, Company, ICICIdirect.com Research, Initiated coverage on 7th January 2015
Key events
Date Event
FY12 Industrial bearing undertaking demerged and listed as separate company called NRB Industrial Bearings
FY10-13 Export led growth (67.8% CAGR) boosts the topline (18.7% CAGR)
FY14 Muted automotive growth reflected in muted topline (growth of 2.5% YoY)
FY15 Improvement in automotive sales boosts topline growth (~10% YoY) of NRB. Margins also expand led by operating leverage
FY16 Margin improvement due to continuous growth in exports
FY17 NRB mulls foray in defence, aerospace and railways semgent
Source: Company, ICICIdirect.com Research
Top 10 Shareholders Shareholding Pattern
Rank Name Latest Filing Date % O/S Position (m) Change (m)
1 Trilochan S Sahney Trust 25-07-2017 36.41% 35.29M -0.08M
2 Nalanda Capital Pte Ltd 30-06-2017 9.99% 9.68M 0
3 Zaveri (Harshbeena Sahney) 30-06-2017 8.72% 8.45M +0.00M
4 SBI Funds Management Pvt. Ltd. 30-06-2017 6.97% 6.75M 0
5 ICICI Prudential Life Insurance Company Ltd. 30-06-2017 4.61% 4.47M -0.12M
6 Sundaram Asset Management Company Limited 31-05-2017 3.86% 3.74M 0
7 Sahney (Devesh Singh) 30-06-2017 3.75% 3.63M 0
8 Sahney (Hanwantbir Kaur) 30-06-2017 2.96% 2.87M 0
9 Mondrian Investment Partners Ltd. 30-06-2017 2.53% 2.45M +2.45M
10 DSP BlackRock Investment Managers Pvt. Ltd. 30-06-2017 1.73% 1.68M 0
(in %) Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Promoter 55.0 54.9 54.6 54.6 54.3
FII 19.3 19.3 19.2 19.1 19.3
DII 14.9 14.6 14.8 14.7 15.4
Others 10.9 11.2 11.4 11.6 11.0
Source: Reuters, ICICIdirect.com Research
Recent Activity
Investor name Value Shares Investor name Value Shares
Mondrian Investment Partners Ltd. +4.86M +2.45M ICICI Prudential Life Insurance Company Ltd. -0.25M -0.12M
DHFL Pramerica Asset Managers Private Limited +0.04M +0.02M Trilochan S Sahney Trust -0.16M -0.08M
Zaveri (Harshbeena Sahney) +0.00M +0.00M
Investor name Investor name
Source: Reuters, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 10
Financial summary
Profit and loss statement | Crore
(| Crore) FY16 FY17 FY18E FY19E
Net Sales 666.8 719.6 784.2 847.3
Other Operating Income 8.1 8.0 11.0 11.0
Total Operating Income 674.9 727.6 795.2 858.3
% YoY Growth 0.7 7.8 9.3 7.9
Other Income 2.4 7.8 8.4 9.8
Total Revenue 677.3 735.4 803.6 868.1
Cost of materials consumed 251.7 279.7 305.8 330.4
Change in inventories 8.1 (7.8) (8.5) (9.1)
Employee cost 126.3 130.2 142.3 153.6
Other Expenses 176.3 206.0 225.1 242.3
Total expenditure 562.4 608.2 664.8 717.3
EBITDA 112.6 119.4 130.4 141.0
% YoY Growth (8.5) 6.0 9.2 8.1
Interest 17.0 16.9 15.2 15.5
PBDT (24.8) (3.0) 3.3 0.6
Depreciation 32.0 32.3 33.9 35.0
PBT 63.9 78.0 89.7 100.4
Tax 20.7 22.5 29.1 32.5
PAT 42.0 54.0 59.1 66.2
% YoY Growth (21.1) 28.7 9.4 11.9
EPS 4.3 5.6 6.1 6.8
Source: Company, ICICIdirect.com Research
Cash flow statement | Crore
(| Crore) FY16 FY17 FY18E FY19E
Profit after Tax 42.0 54.0 59.1 66.2
Depreciation 32.0 32.3 33.9 35.0
Interest 17.0 16.9 15.2 15.5
Other income (2.4) (7.8) (8.4) (9.8)
Prov for Taxation 20.7 22.5 29.1 32.5
Change in Working Capital 70.8 (85.7) (19.5) (28.1)
Taxes Paid (21.0) (21.6) (27.8) (32.5)
Cashflow from Operating Activities 159.1 10.7 81.7 78.7
(Purchase)/Sale of Fixed Assets (34.5) (23.8) (21.2) (25.0)
(Purchase)/Sale of Investments - - - -
Other Income 2.4 7.8 8.4 9.8
Cashflow from Investing Activities (32.1) (16.0) (12.8) (15.2)
Issue/(Repayment of Debt) (90.1) 27.5 (34.2) 4.0
Changes in Minority Interest 1.2 1.4 1.5 1.7
Changes in Networth (17.0) (16.1) (23.4) (23.4)
Interest (17.0) (16.9) (15.2) (15.5)
Others - - - -
Cashflow from Financing Activities (123.0) (4.1) (71.4) (33.2)
Changes in Cash 4.0 (9.4) (2.5) 30.4
Opening Cash/Cash Equivalent 28.0 32.0 22.6 20.1
Closing Cash/ Cash Equivalent 32.0 22.6 20.1 50.5
Source: Company, ICICIdirect.com Research
Balance sheet | Crore
(| Crore) FY16 FY17 FY18E FY19E
Share Capital 19.4 19.4 19.4 19.4
Reserves & Surplus 259.8 297.7 333.4 376.2
Total Shareholders fund 279.2 317.1 352.8 395.6
Minority Interest 4.1 5.5 7.0 8.7
Total debt 237.2 264.7 230.5 234.5
Deferred tax liability (net) 11.7 12.7 14.0 14.0
Total Liabilities 532.2 600.0 604.3 652.7
Gross Block 603.5 619.9 639.9 659.9
Acc: Depreciation 344.5 373.4 407.3 442.3
Net Block 259.0 246.5 232.6 217.6
Capital WIP 4.8 8.8 10.0 15.0
Investments 0.1 0.1 0.1 0.1
Inventory 144.7 172.3 180.5 195.0
Sundry debtors 225.9 221.2 249.3 269.4
Cash 32.0 22.6 20.1 50.5
Loans & Advances 64.9 69.8 91.0 98.3
Other current assets 0.1 1.1 1.1 1.1
CL& Prov. 199.8 142.8 180.8 194.6
Net Current Assets 267.8 344.2 361.2 419.6
Total Assets 532.2 600.0 604.3 652.7
Source: Company, ICICIdirect.com Research
Key ratios
(Year-end March) FY16 FY17 FY18E FY19E
Per share data (|)
EPS 4.3 5.6 6.1 6.8
Cash EPS 7.6 8.9 9.6 10.4
BV 28.8 32.7 36.4 40.8
DPS 1.8 1.7 2.4 2.4
Cash Per Share 35.5 38.5 42.0 45.6
Operating Ratios (%)
EBITDA Margin 16.7 16.4 16.4 16.4
PBT / Net Sales 11.9 12.0 12.1 12.4
PAT Margin 6.2 7.4 7.4 7.7
Inventory days 78 86 83 83
Debtor days 122 111 114 115
Creditor days 103 79 79 79
Return Ratios (%)
RoE 15.0 17.0 16.8 16.7
RoCE 16.0 16.1 17.8 18.1
RoIC 16.8 16.0 16.8 18.1
Valuation Ratios (x)
P/E 27.5 21.3 19.5 17.4
EV / EBITDA 12.1 11.7 10.5 9.5
EV / Net Sales 2.0 1.9 1.7 1.6
Market Cap / Sales 1.7 1.6 1.5 1.3
Price to Book Value 4.1 3.6 3.3 2.9
Solvency Ratios
Debt/EBITDA 2.1 2.2 1.8 1.7
Net Debt / Equity 0.7 0.8 0.6 0.5
Current Ratio 2.2 2.8 2.9 2.9
Quick Ratio 1.5 1.8 1.9 1.9
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 11
ICICIdirect.com coverage universe (Capital goods)
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Bhel (BHEL) 129 118 Hold 41608 14.9 3.1 8.1 8.7 41.4 16.0 10.3 0.0 4.1 10.9 2.4 5.8
AIA Engineering 1400 1,420 Hold 12880 43.9 40.9 54.2 31.9 34.2 25.8 24.7 21.9 22.4 22.1 19.6 19.9
Thermax (THERMA) 866 1000 Hold 10223 12.2 25.5 31.5 71.0 34.0 27.5 11.6 12.1 13.6 5.6 11.2 12.0
KEC International (KECIN) 284 330 Buy 3881 12.8 14.1 18.0 22.2 20.1 15.8 16.1 17.0 18.8 17.4 16.1 18.1
Greaves Cotton (GREAVE) 148 164 Hold 3611 7.3 8.1 9.1 20.3 18.3 16.3 28.7 30.6 33.1 21.2 21.8 23.6
Bharat Electronics (BHAELE) 176 194 Hold 43332 6.9 7.2 7.8 26.3 25.2 23.5 27.7 26.2 24.5 20.5 18.8 17.9
Engineers India (ENGIND) 150 182 Buy 12264 4.8 6.1 7.6 31.1 24.4 19.8 17.4 19.1 21.1 11.8 14.0 15.8
VaTech Wabag (VATWAB) 633 765 Buy 4154 18.8 37.9 46.4 33.3 16.5 13.5 25.8 27.9 28.9 10.6 19.2 20.3
SKF (SKFIND) 1560 1,800 Buy 9492 46.3 53.0 61.7 33.7 29.4 25.3 20.7 23.1 23.8 13.5 15.1 15.6
Timken India (TATTIM) 706 867 Buy 5895 14.3 15.9 19.3 48.3 43.3 35.8 22.7 24.2 25.5 16.0 15.7 16.6
NRB Bearing (NRBBEA) 119 123 Hold 1192 5.6 6.2 6.8 21.2 19.2 17.3 16.1 17.9 18.1 17.0 16.9 16.7
Grindwell Norton (GRINOR) 392 500 Buy 5536 10.8 12.5 14.4 39.4 34.1 29.6 19.5 21.3 22.4 13.4 14.2 15.0
RoE (%)EPS (|) P/E (x) RoCE (%)
Source: Company, ICICIdirect.com Research
ICICI Securities Ltd | Retail Equity Research Page 12
RATING RATIONALE
ICICIdirect.com endeavours to provide objective opinions and recommendations. ICICIdirect.com assigns
ratings to its stocks according to their notional target price vs. current market price and then categorises them
as Strong Buy, Buy, Hold and Sell. The performance horizon is two years unless specified and the notional
target price is defined as the analysts' valuation for a stock.
Strong Buy: >15%/20% for large caps/midcaps, respectively, with high conviction;
Buy: >10%/15% for large caps/midcaps, respectively;
Hold: Up to +/-10%;
Sell: -10% or more;
Pankaj Pandey Head – Research [email protected]
ICICIdirect.com Research Desk,
ICICI Securities Limited,
1st Floor, Akruti Trade Centre,
Road No 7, MIDC,
Andheri (East)
Mumbai – 400 093
ICICI Securities Ltd | Retail Equity Research Page 13
Disclaimer
ANALYST CERTIFICATION
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issuer(s) or securities. We also certify that no part of our compensation was, is, or will be directly or indirectly related to the specific recommendation(s) or view(s) in this report.
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