NRB Bearings: Pick of the week

HDFC Sec | Feb. 25, 2019, 11:23 a.m.

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NRB has been posting strong results driven by robust growth in the Indian automobile industry. It remains a key beneficiary of the strong volume growth witnessed in the automobile segment. Exports by the company are also increasing at a strong pace. Implementation of emission norms from FY20 is likely to trigger pre-buying in CVs and boost volume growth. Increasing R&D spend and foray into Defence, Aerospace and Railway segments coupled with fall in interest cost would aid in topline and margin expansion. We feel investors could BUY the stock at CMP and add on declines to Rs 164-168 band (13x Dec-20E EPS) for sequential targets of Rs 209.5 (16.5x Dec-20E EPS) and Rs 222.5 (17.5x Dec-20E EPS) in three to four quarters. At a CMP of Rs 186, it is trading at ~14.6x Dec-20E EPS.



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