SNL Bearings Limited

 

CMP = 263

SNL Bearings Ltd is engaged in the manufacturing and marketing of antifriction bearing products. SNL Bearings (earlier known as Shriram Needle Bearings) was established in 1983  as a joint venture between the DCM Shriram group and Industriewerk Schaeffler INA - Ingenieurdienst GmbH Germany. By virtue of being associated with Schaeffler INA, SNL got the opportunity to have one of the finest technologies in the world in Needle Bearing manufacturing. 

In year 2000,  SNL Bearings Ltd was sold to NRB Bearings Limited under BIFR revival plan. NRB acquired a 45% stake in the company and gradually increased its stake to 74.39% at present. The acquisition of SNL was done mainly to consolidate its strong technical and machine expertise given the similar nature of the product. It is noteworthy that NRB has turnaround the company which was earlier loss making.

NRB Bearings Ltd is Indian origin MNC, It is the largest needle roller bearing player in India and the fifth-largest bearing company with ~7% market share in the  total organised bearing market in the country. It is one of the two major organised bearing players of Indian origin and  among top five bearing players in the country.

With combination of different technologies that is simply world class SNL can rightfully boast of technologically ahead of many in the business. SNL has a capability of manufacturing its own special purpose machines required for Bearing manufacturing. The ability to design and develop Low cost Automation would surely be the pride of many in the business it self. This gives SNL to become the most cost-effective manufacturer of the products. SNL becomes a unique and perfect industry that manufactures its machines for its products and designs and develops all sorts of low cost automation that add to its productivity significantly. SNL has a team of very talented and innovative people inclined to develop cost effective machines and processes always working towards the customers benefit. 

For more than two decades SNL is one of the leading suppliers to serve  in automobile sector, general engineering sector, railways, and to electrical equipment manufacturers. It also manufactures special purpose machines and tools for the bearings industry. The product range of the company includes needle bearings, needle rollers, needle cages, needle bushes, thrust cages,  thrust bearings and special application roller bearings which are used in gear boxes and propeller shafts, connecting rods, steering systems, chassis and suspension, industrial machinery and domestic appliances.The products of the company are supplied to a customer base comprising of original equipment manufacturers producing motorcycles, scooters, cars and trucks in India.

Some of the domestic customers include Denso India, Tractors India, Maruti, Mahindra & Mahindra, Sona Steerings, Tata motors and TAFE in the four-wheeler industry and Bajaj Auto, Hero, Kinetic Engineering, Honda, and LML in the two-wheeler segment.  Besides it manufactures some industrial bearings as well used in Textile machineries and household appliances. SNL exports its products to some of the countries across the globe.

Promoters

Ms Harshbeena Sahney Zaveri is Chairperson of the Board of SNL Bearings Limited and Managing Director of NRB Bearings Limited (holding company). Under her leadership SNL bearing has turnaround from BIFR sick unit to highly profitable. She is passionate about quality and design engineering, she spearheaded NRB's foray into Design Engineering and R&D, it has enabled NRB to become a supplier to the world's foremost engineering brands including Volvo, Ingersoll Rand, ZF, Mercedes and Audi. Fortune Magazine has ranked Harshbeena amongst the 15 most powerful businesswomen in India.

Finding the right bearings

https://youtu.be/h8vDpSQwzws

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Investment Rationale

Bearings find its applications in almost every industry, machines and domestic equipments. The global bearing market is gaining more importance owing to rising utilization of bearing products in various end-use industries. Technological developments in bearing sector have improved the overall efficiency  and enhanced the shelf life of the machines and equipments.

The Indian bearings market size is expected to grow @ 8 -10 % CAGR between 2022 and 2027. The rapid adoption of electric vehicles  ( EVs)  and growth in old vehicle population are the primarily  growth driver for bearings in automobile sector.  Similarly  rapid adoption of automation and robotics  are the major  demand driver in industrial sector. There will be opportunity to develop high-quality bearings in terms of tolerance and heat management for high-speed EVs.

The bearings are key deciding factors for the smooth operation, reliability, long life cycle and success of any  machinery / equipment because bearing failure can cause major damage to any machine / equipment. Indian bearing market is mainly dominated by few foreign MNCs like SKF, NSK, Schaeffler (FAG) and Timken. There are only few Indian origin companies are having technology and expertise to manufacture high quality bearings to compete with these foreign MNCs. 

SNL Bearings is small but benchmark player in the bearing industry. NRB Bearings along with SNL Bearings commands ~70% market share in organised needle roller bearing market, which implies low competition for the company. This is on account of close OEM relationships and customised product offerings with strong engineering capabilities of its R&D team.

The SNL has access to world-class technology through its parent company NRB Bearing Ltd. SNL has also capabilities to manufacture its own special purpose machines required for bearing manufacturing.

Apart from automobile sector, the increasing demand from various applications like office automation, surveillance and security equipments, industrial robots, medical equipment, audio-visual equipment and machine tools has resulted in the adoption of precision  and miniature bearings. 

Conclusion

SNL is a niche player in bearing industry. The company has a strong set of financials and fundamentals. Its association with NRB Bearing gives access to advanced technology and vast client base in India and across the world. SNL Bearing stock at cmp 265 is giving excellent investment opportunity for  short term to long term ( 1 year to 5 years ). It can be bought + / - 15% from cmp with 10 % allocation.