With a dip in growth expected in FY20E and sluggish environment overall, we expect revenue, EBITDA and PAT to de-grow 6.5%, 20.1% and 24.1% CAGR, respectively, in FY19-21E. We expect the recovery to be modest in FY21E but the timing of the same is difficult to envisage. On the whole, lower asset turns and volatile margins will negatively impact RoCEs, which are expected to decline to 12.3% in FY21E from 21% in FY19. The current valuations at 17.1x FY21E P/E mostly capture a recovery in auto demand and leave no upside. We value NRB at ~15x FY21E earnings to arrive at a target price of | 95/share. We have a REDUCE rating (earlier HOLD) on the stock.
With growth moderation expected in FY20E, we expect revenue, EBITDA and PAT to grow at 9.8%, 8.1% and 4.3% CAGR, respectively, in FY19-21E. NRB has executed a capex of ~Rs 50 crore in FY19. The company currently operates at utilisation levels of ~80%. For FY20-21E, NRB has planned a capex ~| 100-150 crore. Debt levels have gone up from ~Rs 173 crore in FY18 to ~Rs 260 crore in FY19. Going ahead, debt levels’ working capital management will be the key monitorable. We value NRB at ~15x FY21E earnings to arrive at a target price of Rs 185 per share. We have a HOLD recommendation on the stock.