Hello,

We read 100s of reports (annual reports, credit rating reports, presentations, concalls) in a year and make notes for our reference. Going forward, we will be positing such notes for the benefit of the readers of our website.

The purpose of reading and analyzing so many stocks is to have a bigger watch-list and come out with few good stock recommendations for our premium members.

However, do keep in mind, such notes are mostly cut, copy and paste and are in no way a research report or a recommendation on the stock.

Here are some interesting details about the company from its Oct'20 corporate presentation:

Menon Bearings Oct'20 presentation:

  • MBL is one of the leading manufacturers of highly critical moving engine components that operate in high temperatures & pressures inside demanding engines with high payloads & reliability. These products have long & highly collaborative development cycles, and also require rigorous testing & validation before it ca be fit inside assemblies of critical applications.
  • A limited number of players operate in this segment which has very high entry barriers due to the nature of the components.
  • Our competitors include - Federal Mogul, KSPG (formerly Kirloskar Bearings), Bimetal Bearings
  • MBL has a major share of business with marquee global OEMS. However, No single customer contributes more than 10 to 12% of MBL’s business
  • Clients -
  • MBL exports 30% of its production
  • MBL has an office in Indianapolis which manages warehousing in the U S A to service customers in & around the USA region since the last 20 years.
  • MBL is among the very few companies to have facilities to produce next generation lead free material to produce next generation parts
  • Sales - 49.33% OEM, Exports - 36.90%, Replacement market - 6.57%, Electrical business - 1.04%, other - 6.16%
  • Products - bearing, bush, washer
  • Applications - Heavy commercial vehicles, light commercial vehicles, construction equipment, tractor, material handling (excavators), stationary engines, diesel engines, gasoline engines, CNG engines
  • Diversification - Since 2010 , MBL has diversified from Engine Bearings (Crank Shaft Parts) to bi-metal parts required for drive Train Transmission, Differential gear, Brake, Steering, Suspension, Axles, etc.
  • Aluminium division - In 2008 MBL Strategically Diversified into a new product segment with huge potential, namely Finished Critical Aluminium Die Cast Components. This aluminium division named Alkop contributes about 25% of the top line & balance 75% is contributed by Bimetal products ( ie. engine bearings, bushes & thrust washers). Alkop supplies to world leaders like Honeywell & Eaton.
  • Capacity expansion - Planned Bi-metal Capacity Expansion...3 mn. pcs p.m. to 5 mn pcs p.m. by 2021. MBL has a healthy order book position of Bimetal parts & aluminium castings orders in pipe line from domestic & global customers
  • Projections -
  • Assumption for guidance - Before the downturn in Automobile Industries & Covid-19 effect, we clocked a total turnover of Rs176 Cr. in the year 2019 i.e. Rs. 132 Cr in Bearing Division and Rs44 Cr.in Alkop ( Al Casting Division ). We expect normalization in 2021 & 2022. Hence the projected turnover is Rs. 150 Cr. and Rs. 56 Cr. respectively in Bearing and Alkop.
  • farm sector demand already gathering traction, exports already gathering traction, increased infra spending by govt. to boost demand
  • EV challenge - MBL caters mainly to the heavy segment like Mines (Earth Moving), marine Engines, Tractors, LCV, HCV etc. & hence is reasonably less challenged. MBL's engineering skills & setup can be adapted to make EV parts when required

 

Disclosure: This is neither a research report or a recommendation on the stock. I don’t have any investment in the stock.

 

Best Regards,

Ekansh Mittal
Research Analyst

 

Research Analyst Details

Name: Ekansh Mittal     Email Id: [email protected]    Ph: +91 727 5050062

Analyst ownership of the stock: No

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