NRB Bearings hits record high; soars 31% in 3 weeks on strong Q2 results

The stock hit a record high of Rs 200, up 6%, surpassed its previous high of Rs 193 touched on June 13, 2018, in intra-day trade.

Shares of NRB Bearings hit a record high of Rs 200 per share, up 6% on the BSE, gaining 31% in past three weeks after reporting a strong set of numbers for the quarter ended September (Q2FYIn). In comparison, the S&P BSE Sensex was up 4.5% during the same period. The stock surpassed its previous high of Rs 193 touched on June 13, 2018, in intra-day trade.

NRB Bearings posted 38% year-on-year (Y-o-Y) growth in net profit at Rs 291 million in Q2FY19, on improved overall sales. The operational revenue during the quarter grew 20% at Rs 2,510 million on the Y-o-Y basis.

For the first half (April-September) of current fiscal, the net profit of the company rose 89% to Rs 626 million against Rs 347 million in the corresponding period of previous fiscal. The company reported Rs 165 million exceptional gain in the first half of current fiscal represents surplus on sale of property.

Growth estimates for 2018-19 projected by the company, after assessing demand forecasts with all major OEMs, also highlight the optimism about another year of good all round growth, NRB Bearings said in an annual report.

The company is in the ball and roller bearing business for the requirements of the mobility industry which has original equipment manufacturers (OEMs) accounting for 65% -70% of the demand while the rest is supplied to the aftermarket (12% -15%) and exports (20% - 25%).

NRB’s growth story is premised on strong volume growth in OEMs (account for ~68% of revenue), revival in exports, led by a recovery in the North-American and European truck/PV markets (~24% of revenue), improvement in operating margin led by increasing presence in high-margin export business and benefit of operating leverage and reduction in debt along with fall in interest cost, according to analysts at HDFC Securities.

The brokerage firm maintains ‘buy’ rating on the stock with 12-month target price of Rs 217 per share, on the expectation of strong growth in Q3, led by decent growth in the domestic market and strong export numbers.

At 02:28 PM; NRB Bearings was trading 5% higher at Rs 197 on the BSE, as compared to 0.66% rise in the S&P BSE Sensex. A combined 749,984 equity shares changed hands on the counter on the BSE and NSE so far.