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Auto and Auto-ancillary stocks seems to be in flavour these days. Many haven't fallen much and some, including our own recommendation on FIEM Industries have scaled up new all time highs.
Today, we would like to bring to your notice Menon Bearings and share notes from one of its presentations. Hope you find the details useful for your own investments or to add the stock to your watchlist:
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.
Before that, if you are interested in investing in our Latest Stock Recommendation which could benefit from the massive growth expected in the CNG segment and still available around 10 times earnings, you can read about it by Clicking HERE
Menon Bearings Oct'20 presentation:
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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.
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A limited number of players operate in this segment which has very high entry barriers due to the nature of the components.
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Our competitors include - Federal Mogul, KSPG (formerly Kirloskar Bearings), Bimetal Bearings
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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 -
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MBL exports 30% of its production
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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%
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Products - bearing, bush, washer
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Applications - Heavy commercial vehicles, light commercial vehicles, construction equipment, tractor, material handling (excavators), stationary engines, diesel engines, gasoline engines, CNG engines
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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.
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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.
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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
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Projections -
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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.
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farm sector demand already gathering traction, exports already gathering traction, increased infra spending by govt. to boost demand
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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
Disclaimer: This is not a recommendation to buy/sell Menon Bearings. These notes are as announced by the companies on exchanges and only for the purpose of information and education.
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: Yes, in FIEM Industries
Details of Associates: Not Applicable
Analyst Certification: The Analyst certify (ies) that the views expressed herein accurately reflect his (their) personal view(s) about the subject security (ies) and issuer(s) and that no part of his (their) compensation was, is or will be directly or indirectly related to the specific recommendation(s) or views contained in this research report.
Disclaimer: www.katalystwealth.com (here in referred to as Katalyst Wealth) is the domain owned by Ekansh Mittal. Mr. Ekansh Mittal is the sole proprietor of Mittal Consulting and offers independent equity research services to investors on subscription basis. SEBI (Research Analyst) Regulations 2014, Registration No. INH100001690
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This report is for the personal information of the authorized recipient and does not construe to be any investment, legal or taxation advice to you. Ekansh Mittal/Mittal Consulting/Katalyst Wealth is not soliciting any action based upon it. This report is not for public distribution and has been furnished to you solely for your information and should not be reproduced or redistributed to any other person in any form. This document is provided for assistance only and is not intended to be and must not alone be taken as the basis for an investment decision. Ekansh Mittal or any of its affiliates or employees shall not be in any way responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report. Neither Ekansh Mittal, nor its employees, agents nor representatives shall be liable for any damages whether direct or indirect, incidental, special or consequential including lost revenue or lost profits that may arise from or in connection with the use of the information. Ekansh Mittal/Mittal Consulting or any of its affiliates or employees do not provide, at any time, any express or implied warranty of any kind, regarding any matter pertaining to this report, including without limitation the implied warranties of merchantability, fitness for a particular purpose, and non-infringement.
The recipients of this report should rely on their own investigations. Ekansh Mittal/Mittal Consulting and/or its affiliates and/or employees may have interests/ positions, financial or otherwise in the securities mentioned in this report. Mittal Consulting has incorporated adequate disclosures in this document. This should, however, not be treated as endorsement of the views expressed in the report.
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Disclosure (SEBI RA Regulations)
Whether the research analyst or research entity or his associate or his relative has any financial interest in the subject company/companies and the nature of such financial interest – Yes, in FIEM Industries
Whether the research analyst or research entity or his associates or his relatives have actual/beneficial ownership of 1% or more securities of the subject company (at the end of the month immediately preceding the date of publication of the research report or date of the public appearance) – No
Whether the research analyst or research entity or his associate or his relative has any other material conflict of interest at the time of publication of the research report or at the time of public appearance – No
Whether it or its associates have received any compensation from the subject company in the past twelve months – No
Whether it or its associates have managed or co-managed public offering of securities for the subject company in the past 12 months – No
Whether it or its associates have received any compensation for investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether it or its associates have received any compensation for products or services other than investment banking or merchant banking or brokerage services from the subject company in the past 12 months – No
Whether the subject company is or was a client during twelve months preceding the date of distribution of the research report and the types of services provided – No
Whether the research analyst has served as an officer, director or employee of the subject company – No
Whether the research analyst or research entity has been engaged in market making activity for the subject company – No