FAG Bearings India Posted Muted Results For Q3FY13

Fag Bearings India has posted subdued results for the recently concluded December 2012 quarter. The net sales remained flat for the quarter at Rs 343.56 crore for Q3FY13 as against Rs 345.86 crore for Q3FY12. The bottomline declined to Rs 29.69 crore for the quarter compared to Rs 42.96 crore in the third quarter of FY12. The profits have been affected by higher expenses. In the December 2012 quarter, the expenses as a per cent of sales stood at 89.01% of the topline, against 82.73% as of December 2011. 

For the aforesaid reason, the EBITDA has declined by 36.79% on a YoY basis for Q3FY13 to stand at Rs 37.76 crore as against Rs 59.74 crore for Q3FY12. The company has witnessed a severe pressure on the margins front. The EBITDA margins stood at 10.99% for Q3FY13 as against 17.27% for Q2FY12, witnessing a contraction of 628 basis points on a YoY basis. The same has been the case with the PAT margins which witnessed a contraction of 378 basis points to stand at 8.64% for the quarter.

The expenses have played a major role in the dismal performance of the company as there is a little impact on the interest costs, Fag Bearings being a debt-free company. On the valuations front, the stock discounts its trailing twelve month earnings by 8.24x. 

Also, to celebrate the 50th Anniversary of the company, it has declared a dividend of Rs 5 per share. But looking at the current results, it can be concluded that one should wait for at least one more quarter to invest in the company.