NRB BEARINGS LIMITED
Know the Company
Founded in 1965 as an Indo-French joint venture, NRB Bearings Ltd (NRB) played pioneering role to manufacture needle and roller bearings in India. With over six decades, NRB has consistently been a market leader in bearing technology in the domestic market. NRB manufactures needle, cylindrical, special ball, and taper-roller bearings. It also makes other friction solution such as planetary shafts, crank pins, and kingpins. Company claims that nearly 90% of the Indian vehicles are equipped with NRB’s bearing solutions.
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NRB Bearings Ltd has a subsidiary named SNL Bearings Limited where it has 74.4% stake, and listed on the BSE, with market capitalization of about Rs 150 crore.
SNL manufactures several products including cage-guided drawn cup needle bearings and connecting-rod needle cages for piston pins and crank pins, among other needle bearings. Notably, approximately one-third of its end products are supplied to NRB Bearings. NRB’s overseas subsidiaries includes, NRB Bearings (Thailand) Limited, NRB Bearings Europe GmbH and NRB US Inc.
NRB’s manufacturing facilities are situated at Thane, Aurangabad, Jalna, and Waluj in Maharashtra; one in Hyderabad; and another one at Pantnagar in Uttarakhand. SNL’s facility is at Ranchi in Jharkhand, while NRB Thailand’s plant is at Rayong in Thailand. NRB has Government accredited two R&D centers that are focuses on quality engineering and disruptive technologies.
Service Segments
The Company produces a wide range of bearings catering to various industries, with a focus on automotive and industrial applications. Their product portfolio includes needle roller bearings, cylindrical roller bearings, and tapered roller bearings. Its bearings are used in transmissions, engines, axles, and other critical components in those applications.
NRB has customers across multiple segments; however, major users of the company’s products are from Automobile manufacturers that comprise of Two and Three wheelers, Industrial 4 stroke engines manufactures, passenger four-wheeler vehicles ranging from small cars to luxury models and utility vehicles. Apart from this, NRB’s products are widely used in Commercial vehicles, Farm equipments and off-road vehicles, construction equipments, Railway locomotives and aerospace applications. The company also has strong presence in the secondary market also. In the FY2023, 55% of its revenue came from Needle Roller Bushes and Cages, 30% were from Ball and Roller bearings and 15% from Automobile components.
Strengths
NRB is not only recognized as a leader in needle roller bearings but also maintains a robust presence in traditional cylindrical roller bearings segment too. Since its inception, NRB has expanded focus beyond its initial flagship product, diversifying its offerings to include a comprehensive range of high-precision friction solutions for various mobility applications. The company has introduced several types of bearings, including the new generation lightweight drawn cup bearings.
Its extensive product range comprises over 3000 designs, conscientiously crafted to meet the specific requirements of its customers.
Approximately 65% of the demand for NRB’s products is driven by Indian Original Equipment Manufacturers (OEMs) and Tier I customers. Another 15% of the demand comes from the secondary market, while the remaining is attributed from exports. The majority of exports are directed towards Original Equipment Manufacturers (OEMs) and Tier I customers.
The company commands an estimated market share of 60% in the needle bearing industry in the domestic markets, with a strong presence in the cylindrical roller, special tapered roller, and special ball bearings segments. Though a significant proportion of the Company’s revenue comes from OEMs, no individual customer or its tier-1 supplier contributes more than 12% to the total revenue. In effect, this minimizes the risk associated with customer concentration.
Bearings are among the most crucial components for improving the performance of all rotating parts. It used in equipments to minimize friction, making them an essential part for the energy-efficient operations. So, bearings are widely used in modern equipments as a crucial component.
Bearings find applications in various machines and equipments, spanning from household appliances and aerospace & defense equipment to farm machinery and automobile components, among others. This diverse range of applications is also expected to contribute to the bearing industry’s growth.
Healthy Balance Sheet
NRB is going on a Capex of around Rs.200 crore for capacity expansion in its Thailand subsidiary, as well as reinforcing its presence in the electric vehicle (EV) segment through the development of new products, but only in a cautious manner.
In May 2023, NRB signed a memorandum of understanding with Mumbai-based Oberoi Realty to sell a 6.4-acre land parcel in Thane for Rs 196 crore. Subsequently, in December 2023, the deal was successfully concluded. NRB also intends to sell smaller units, as a move that has the potential to generate funds for capital expenditures and helps to reducing debt levels. It will also help to a more streamlined and cost-effective manufacturing structure. The company aims to use the sales proceeds from the land to offset planned capital expenditures or re-allocate the funds among shareholders.
As of September 30,2023, NRB has borrowings of around Rs 306 crores on its books as against a net worth of Rs 651 crore, which translate to a healthy leveraging ratio of 0.47 times. Apart from the ongoing capital expenditures, the company does not anticipate any significant Capex in the immediate future. Hence, the debt-to-equity ratio expected to maintain healthy levels over the medium term, supported by improved internal accruals.
Outlook
The growths of the automobile and industrial sectors are directly linked to the overall economic growth of the country. With the current growth rate, India is poised to maintain its position as the fastest-growing major economies in the world for the near future. The market growth potential in the Indian mobility industry is substantial, considering the vast geographical areas, demographic profile of its population, and the current low level of vehicle penetration. The surge in the goods mobility segment is propelled by the necessity to establish robust supply chains connecting producers to last mile markets. All of these factors are expected to contribute to an increase in demand for NRB Bearings’ products.
The government’s strong emphasis on infrastructure development, logistics enhancement, and the establishment of industrial corridors will play a significant role in elevating industrial competitiveness and fostering the future growth of the mobility industry, which all are directly benefiting the bearing industry as well.
Challenges
NRB’s major revenue comes from the Automobile segment. This industry is characterized by rapidly changing in nature. Hence the Company must align itself with the evolving requirements of automotive OEMs, who, in turn, are responding to the dynamic expectations of the end customers. Threats from Counterfeit Products are another major challenge for the Company. Secondary market has better margins than OEM supply. But counterfeit products persist in attracting the price-sensitive replacement market, constituting 20-25 per cent of the total demand in the bearing industry.
Sector: Automobile and Auto Components
Market Price: Rs. 377.75 as on today
FV: Rs 2/-
Stock Name: NRB Bearings Ltd
BSE Code: 530367, NSE Code: NRBBEARING
Market Cap.: Rs 3630 Cr
Book Value: Rs. 69.2
Segment: Auto Components & Equipments
Incorporation: 1965
Headquarters: Mumbai, India.
