SNL Bearings- a microcap with great ROE in 2016

Stock Opportunities Untested - but worth a good look
3

Hi,
Company looks interesting looking at ROE. I have just spend a hour on it. Following are my few points:

  1. This is subsidiary company of NRB bearings (hold ~74%). SNL have significant related party transitions with NRB.
    NRB related party.PNG776×111 3.88 KB

So indirectly its future heavily depends on NRBs growth prospects.

  1. SNL has stable Gross profit and EBITDA margins. It couples with good working capital management (might be due to high intercompany transactions). These all leads to Positive operating cash flows (OCF) in all historical years.

  2. As they able to generate decent OCF, They regular redeeming its 11% redeemable preference share capital. That’s lead to declining in total share capital. > Its Equity share capital has not changes from past few years.
    Preference shares are hold by NRB limited. As on March 2015, only 50 lakhs remain which was 800 lakhs in the year 2011.

Disc: Not invested.

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