FAG Bearings India posts mixed results for 4QCY2013

FAG Bearings India Results: Fag Bearings India has posted its fourth quarter and annual results for year ending December 31, 2013 (Fag Bearing India uses Calendar year as financial year). The company manufactures a wide range of ball / roller bearings. The company’s 65% of total revenue comes from selling of ball & rolling bearings, 33% of revenue comes from bearings & components and rest from services.

Annual Performance CY2012-13:
The company's total operating revenue stood at Rs 1430 crore during the year 2013 as against Rs 1435 crore of previous year 2012 with marginal decrease of 1.15 % despite challenging economic condition and weak performances of automotive industry. Its EBITDA has recorded a decline of 17.14% y-0-y to Rs 182.7 crore as compared with Rs 220.5 crore of previous year. Major reasons for decline in EBITDA of the company are rise in prices of raw materials. The compnay imports major raw material from Germany, Hong Kong and China, since INR has depreciated during the year it has also affected it’s performance. Cost of material which is 35% of total operating revenue has increased by 5.3 % on yearly basis. Purchase of stock in trade which is 30 % of total operating revenue has increase by 5.5% on yearly basis. Increase in expenditure is more as compare with increase in revenue.

Bottom line of the company has fallen by 24.5 % of decrease in CY13 to Rs 121 crore as compare with Rs 160 crore of CY12. Net profit margin has dropped with 246 points to 12.78% during CY 13 to 15.24 % of CY12.
Quarterly Performance Q4CY13-Q4CY12:
FAG bearings India performance during fourth quarter is above the expectation of street. Net operating profit during Q4CY13 stood at Rs 399.49 crore as compare with Rs 343.5 crore of corresponding quarter of previous year with growth of 16.28%. EBITDA of the company is showing increase of 20 % over same quarter previous year to 49.85 crore against 41.5 crore of Q4CY12. During the fourth quarter also company faced pressure from expenditure side mainly from cost of material, Purchase of stock and depreciation. Cost of material has gone up by 40.5% during Q4CY13 to 140.5 crore against Rs 100.03 crore of Q4CY12. Purchase of stock in trade and depreciation has recorded growth of 16.28% and 35.4 % respectively on yearly basis.

Net profit of the company has gone up by 16 % to Rs 35 crore during the fourth quarter against Rs 30 crore of Q4CY12. The company is able to sustain profit margin of 8.7 % in Q4CY12 as compare with 8.7% Q4C13 despite of weak performance of automotive and the industrial sector which is key growth driver for the company.
FAG Bearings India has informed BSE that the board of director at its meeting held on February 11, 2014, recommended a divided for the year ended December 31 2013 at rate of Rs 6 per share. Currently its share price is trading at Rs 1596.90 with a minor increase of 0.80% over its previous close. We maintain our positive stance on the company, considering its strong parentage, debt-free status and its performance improvement since last two quarters.