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    Buy NRB Bearings, target price Rs 168: HDFC Securities

    Synopsis

    NRB Bearings Ltd., incorporated in the year 1965, is a Small Cap company (having a market cap of Rs 1288.59 Crore) operating in Auto Ancillaries sector.

    Buy,-sell-1---IStock
    Bearings industry has strong entry barriers for new entrants due to the technology and customer approval process.
    HDFC Securities has buy call on NRB Bearings with a target price of Rs 168. The current market price of NRB Bearings is Rs 141.25.

    Time period given by analyst is six months when NRB Bearings Ltd. price can reach defined target.

    NRB Bearings Ltd., incorporated in the year 1965, is a Small Cap company (having a market cap of Rs 1288.59 Crore) operating in Auto Ancillaries sector.

    Financials
    For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 209.17 Crore, down -20.53 % from last quarter Total Income of Rs 263.21 Crore and up 212.75 % from last year same quarter Total Income of Rs 66.88 Crore. Company reported net profit after tax of Rs 16.83 Crore in latest quarter.

    Investment Rationale
    NRB is gearing up for the ‘next normal’ as new product lines and industry dynamics get redefined. It focuses on component categories that could contribute more to vehicle costs as these provide higher margins, on components which are not likely not be replaced with the advent of electric vehicle (EV) and new products for EV, and plans to expand its portfolio to serve adjacent industries.
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    NRB has done capex of ~Rs 200cr during FY18-FY21, but due to slowdown in the Auto industry and the pandemic, the fruits of this capex are yet to be fully realized. Bearings industry has strong entry barriers for new entrants due to the technology and customer approval process.

    Bearings industry (including NRB) could be the beneficiary of the capex cycle that India could experience over the next few years. NRB quotes at a significant discount to its peers (most of whom are MNC owned) despite the fact that its financial ratios are on par or better and technological expertise is as good as its peers. The brokerage expects NRB’s revenue/EBITDA/PAT to grow at 17/21/29% CAGR over FY21-FY23, led by the increased demand in the automobile industry, operating leverage and reduction in debt.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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