Stock of this auto ancillary company has zoomed 40% in 4 trading sessions

Till 01:39 PM; a combined 9.7 million equity shares representing 2.9 per cent of total equity of NRB Bearings have changed had on the NSE and BSE.

Shares of NRB Bearings hit a record high of Rs 400.75, as they rallied 13 per cent on the BSE in Wednesday’s intra-day trade backed by heavy volumes in an otherwise weak market.

In past four trading days, the stock of auto ancillary company has zoomed 40 per cent. At 01:39 PM; NRB Bearings was trading 9 per cent higher, as compared to 0.43 per cent decline in the S&P BSE Sensex at 71,584. A combined 9.7 million equity shares representing 2.9 per cent of total equity of NRB Bearings changed hands on the NSE and BSE.

On clarification on significant increase in volumes of the security, NRB Bearings on Monday, January 1, informed BSE that the volume increase observed by exchange appear to be market driven as the company has been regular and diligent in informing the exchanges all such information which in their opinion could impact the Price/Volume behaviour of their scrip.

There has been no information /announcement (including impending announcement) which in our opinion may have a bearing on the volume of the equity shares of the Company being traded, NRB Bearings said.

NRB Bearings is engaged in the manufacture of ball and roller bearings. NRB is leading the way by supplying its global customers in 45 counties and is now a key supplier in advanced mobility applications that will revolutionize and propel the Indian auto component industry forward both domestically and internationally. NRB’s focus and embracing of future technologies along with re-inventing and altering its capabilities has led to supplying the world’s foremost electric vehicles (EVs), in Europe, America and Japan and Korea.

The $222 billion Indian Automobile industry is expected to reach $300 billion by 2026. Automobile contributes nearly 6 per cent of India’s GDP and 35 per cent of the manufacturing GDP. The EV market is expected to grow at CAGR of 49 per cent between 2022 and 2030 and is expected to hit 10 million annual sales by 2030.

The Government of India’s Automotive Mission Plan (AMP) has come a long way in ensuring growth for the sector. Indian automobile industry is expected to achieve a turnover of $300 billion by the year 2026 and will grow at a rate of CAGR 15 per cent from its current revenue of $74 billion, NRB Bearings said in its FY23 annual report.

As per Automobile Component Manufacturers Association (ACMA) forecasts, automobile component exports from India are expected to reach $80 billion by 2026. The Indian auto-components industry is set to become the third largest in the world by 2025. Indian auto-component makers are well positioned to benefit from the globalization of the sector as exports potential could increase exponentially in the next decade, it added.

NRB Bearings further said, the company along with its subsidiaries, with agility and speed has been steadily investing in and developing innovative process technology and building / customizing its machines for low volume, custom-designed products and high range production techniques and is leveraging its fast-paced, on-going investment approach has led NRB to become the first choice supplier for EVs and EVs agnostic friction solutions the world over.

Analysts at ICICI Securities believe that NRB is strongly positioned to benefit from growing demand in both domestic and export markets. With a visibility of ~23 per cent PAT CAGR over FY23-25E and a controlled leverage,

NRB is highly undervalued at 19x across the bearings space (other players quoting at 30x-40x on 2 year forward EPS). Even discounting the fact that it has one segment exposure unlike other bearings companies, the stock still remains undervalued and look attractive considering the multiple growth drivers, the brokerage firm said in company update. The stock, however, is now trading above analyst’s target price of Rs 345 per share.