Result review: FAG Bearing

Result review: FAG Bearing

For Q3CY08, FAG Bearing clocked 31.3% growth in net sales to Rs212.8 crore, which exceeded our expectation of Rs175 crore. The company registered operating margins of 21.8% as against 22% in Q3CY07, a decline of a meager 20bps.

This was basically due to the rise of 466bps in raw material cost that accounted for over 61% of sales (56.4% in Q2CY07). However, the same was off-set by the y-o-y decrease in labour and other manufacturing cost (as a % to sales) by 45bps and 295bps respectively.

Strong growth in EBITDA was supported by higher other income of Rs4.9 crore (Rs2.2 crore) and interest income of Rs1.5 crore (Rs0.3 crore) which helped the company to post a robust growth in bottomline.

Depreciation remained flat at Rs50.7 crore (Rs48.3 crore for Q3CY08). All this contributed to the rise in PAT margins by 72bps posting a PAT of Rs30.6 crore, a rise of 39.8% y-o-y. We maintain a BUY on the stock.