Friday, October 23, 2009

FAG Bearings

Very bad results. Margins have taken a massive hit. Stock is down 5%. Company doesn't talk to investors - so difficult to figure out what is really going on. Company is on track to do a Rs 40 EPS - 12x PE, which is not dirt cheap. I used to think this is trading at 8x-10x PE, assuming Rs 60 EPS for full year. Point to note with this company is - revenues go up sequentially. 3Q08 was a sharp jump over 2Q08, so yoy 3Q09 is down quite massively. This doesn't seem to be a seasonal business.

Considering 20% of my India portfolio is in this stock, I want to exit it. But considering it is so illiquid, I will need to figure out a better time to exit.

NRB Bearings is up 8%. It also reported numbers today. 1H profit is 8.5 crore. If we annualize it, we come to 17 crore. Market cap of FAG is 300 crore. So it is trading at 15x. FAG is still cheaper.

I hope this is the bottom of margins. Hopefully Schaffler group is not screwing us - the minority shareholders of FAG.

1 comment:

Gret Penny Stocks said...

I would like to comment about how can technical analysis account for the unexpected sudden death or illness of a guy like steve jobs. Or when a person of really great importance leaves a company suddenly. A sudden unexpected major lawsuit against a company. Even a unexpected earnings suprise on the downside..What about a takover offer for a company that nobody was expecting. I have nothing against technical analysis Although I remain skeptical about it but I do find it interesting to listen or read about it. I am at heart a fundalmentist when it comes to investing because I believe that invariably and in the end a companies stock price must at some point reflect the performance of the company.