FAG Bearings – -- 1QFY2012 Result Review ::: Angel Broking,

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FAG Bearings – 2QCY2011
For 2QCY2011, FAG Bearings (FAG) registered strong 17.1% yoy (3.1% qoq) net sales
growth to `319.3cr, in-line with our expectation of `324.4cr. Revenue performance was
largely in-line with growth in the automotive industry. EBITDA margin improved by healthy
120bp yoy (down marginally by 13bp qoq) to 20.3% vs. our estimates of 19.5%. This was
primarily due to a ~370bp decline in costs related to purchase of traded goods at 24.7%
against 28.3% of sales. As a result, operating profit jumped by 24.5% yoy (2.3% qoq) to
`64.9cr. Net profit posted a strong 32.2% yoy (4.3% qoq) increase to `44.7cr. Further, a
substantial jump in other income (up 77.2% yoy) helped FAG report strong
earnings growth.
At `1,344, the stock is trading at 13.7x and 12.3x CY2011E and CY2012E earnings,
respectively. We believe the recent run-up in the stock price factors in the expected
earnings growth and considering the rich valuations we maintain our Neutral view
on the stock.