Visit http://indiaer.blogspot.com/ for complete details FAG Bearings (FAG) recorded strong 3QCY2010 performance. Top-line broadly
came in line with our estimates aided by the robust performance registered by
the auto and industrial segments. Operating performance improved on better
operating leverage. Net profit surged on better operating performance and
higher other income. We rollover to CY2012E and recommend Buy on the stock.
In-line performance: For 3QCY2010, net sales grew 31.5% yoy to `272cr
(`207cr) exceeding our expectation of `276cr. This was largely driven by the
substantial jump in overall auto volumes and sharp recovery in the industrial
bearings segment. EBITDA margin expanded by a significant 381bp yoy to
17.7% (13.8%) basically due to the decline in raw material costs by 480bp
during the quarter and favourable currency movement. Bottom-line spiked by
90.1% yoy to `31.4cr (`16.5cr) on robust top-line growth and improvement in
operating performance. Higher other income also aided net profit growth, which
helped FAG register NPM of 11.4% (8%).
Outlook and Valuation: We believe that robust demand in the auto and
industrial segments will aid FAG in registering a CAGR of ~17% in net sales and
~25% in net profit over CY2009-12E. We broadly maintain our estimates for the
company. The stock is currently trading at 12.4x CY2010E and 11.4x CY2011E
EPS. We rollover to CY2012E and recommend Buy on the stock, with a Target
Price of `1,035, valuing the stock at 12x CY2012E earnings.
No comments:
Post a Comment