1. NRB Bearings
1

2. Valuation recommendation and key investment
considerations
Recommendation: BUY
 Analysis from both intrinsic valuation and relative valuation highlight that at current levels NRB Bearings offers a
significant upside
Key investment highlights:
 #4 bearings manufacturer in the organized bearings market
 Market leader in needle roller bearings with ~70% market share
 Continued high investment to support organic growth
 Increasing focus on exports market (high margin business) and industrial components market (currently comprises
primarily of imports)
 Attractive industry growth estimates (as per ACMA):
o Auto Components industry growth CAGR 2011-21: 11.0%
o Auto Components industry exports growth CAGR 2011-21: 18.8%
Key investment concerns
 Rising raw material costs, which may put some pressure on the margins in the short-term
 Exposure to foreign currency risks
 Significant employee costs as compared to peers
2

3. Industry overview
3
 Indian organized ball bearings sector worth INR 45 billion
and has seen healthy growth
o The sector increased by 13% for the year 2011-12
 Domestic industry satisfies 75% of the demand, the balance
25% is met through imports
o International manufacturers have established units in
India through joint ventures or 100% ownership
Industry overview
Growth in key drivers of the sector Industry structure
Bearings
industry
Unorganized ImportedOrganized
~37.5% ~37.5% ~25%
 Historically buoyant growth witnessed in the automotive
industry, the largest consumer of quality bearings, across all
segments
o Indian government’s Automotive Mission Plan 2016 to
facilitate high growth for the sector
o Targets of doubling of the automotive industries
contribution to the Indian economy between 2006-2016
 Infrastructure spending in the 12th Five Year Plan expected
to double to US$ 1 trillion
 Investments in roads, railways and power generation will
result in a multiplier effect across the core sectors
Key sector highlights
Replacement
Special purpose
bearing
OEM
CAGR CAGR
2008-12 2012-21
Passenger vehicles growth 14.0% 13.0%
Commercial vehicles 22.0% 11.0%
Tractors NA 6.0%
Two & three wheelers 16.0% 7.0%
Construction vehicles NA 14.6%
CAGR CAGR
2007-11 2011-21
Auto components 14.6% 11.0%
Auto components - Exports 11.0% 18.8%

4. NRB
70.0%
Others
30.0%
Auto
79.0%
Industri
al
6.9%
Exports
14.1%
OEM
66.9%
After-
market
19.0%
Exports
14.1%
NRB Bearings - Company profile
 NRB operates in the ball and roller bearing business
 Offers c.3,000 customized products to its diversified client
base in the Auto OEM’s and after market segments
 Products find applications in Auto, tractors & farm
equipments & Off highway vehicles
 Customers: Well-established relationships with some major
OEMs with top five customers including Tata Motors, Hero
Honda, Ashok Leyland, M&M, and Bajaj Auto
o Diversified client base with no single customer
accounting for >10% revenues
o Global clientele includes Daimler, Volvo and VW
4
Company overview Sales breakdown (FY2011/12)
Market positioning Organization
NRB Bearings
NRB Industrial
Bearings
(NIBL)
NRB Bearings
(Thailand)
SNL Bearings
73.5% 100% 100%NRB
12.0%
Others
88.0%
Mkt. share of organized
bearings industry
Mkt. share of needle
roller bearings

5. NRB Bearings - Company profile (cont’d)
Industrial bearings
 NRB incorporated NIBL in February’ 2011 to manufacture
bearings for the industrial sector
 NIBL is expected to commence manufacturing industrial
bearings from October, 2012
 NRB to also transfer its industrial bearings operations to
NIBL
 Company’s new plant in Aurangabad to cater its industrial
segment is expected to go on-stream and start contributing
slowly from current fiscal
 NRB expects to increase its industrial bearings market share
in the next 2-3 years through new plant
Exports
 Company plans to focus more on the exports
 Revenue contribution from exports expected to increase to
20% over the next 2-3 years
5
 Operates 8 manufacturing plants (7 domestic and 1 in
Thailand)
Recent developments Manufacturing footprint and locations
Location Year Products manufactured
Thane 1966
Textile bearing, Thrust bearing, steering bearing, Needle
bushes, Needle cages
Aurangabad 1978 Needle rollers
Jalna 1982
Rocker arm bearings, Textile bearings, Taper roller
bearings, Ball bearings, Sperical and Cylinderical ball
bearings
Ranchi 1983
Needle rollers, Needle cages, Full compliment shell
bearings
Waluj 1991
Big and small end bearings, Grease retained bushes, Full
complimented bushes
Hyderabad 1992 Thrust bearings, on rod kits, Cages
Pantnagar 2008
Ball bearings, Needle roller bearings, Cylindrical roller
bearings
Thailand 2007
Spherical bearings, Tapered bearings, Cylindrical roller
bearings , Needle cages, Roller cages

6. 22.1%
20.6%
19.5% 19.3% 19.8%
16.1% 15.6%
17.2%
16.0%
14.3% 14.0% 14.7%
11.1% 10.3%12.0%
10.5%
9.6%
8.3% 9.0% 8.8%
7.8%
12/31/2010 03/31/11 06/30/11 09/30/11 12/31/11 03/31/12 06/30/12
EBITDAmargin EBITmargin Net incomemargin
38.0% 36.1% 35.0% 40.5% 35.1% 38.3% 35.7%
24.0% 26.6% 28.3% 23.8% 28.8%
30.0% 32.5%
16.0% 16.7% 17.2% 16.4% 16.3%
15.6% 16.2%
12/31/2010 03/31/11 06/30/11 09/30/11 12/31/11 03/31/12 06/30/12
COGS as % ofsales SG&Aas % ofsales Employee expenses as % ofsales
NRB Bearings – Historical quarterly performance analysis
6
Note: Figures for NRB on a standalone basis.
NRB revenue figures exclude other income (considered non-operational).
Quarterly development of NRB expenses
Margin development relative to peersQuarterly development of NRB margins
Quarterly expenses relative to peers
as % of sales 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12
COGS
NRB Bearings 38.0% 36.1% 35.0% 40.5% 35.1% 38.3% 35.7%
SKF India 55.2% 56.0% 56.0% 57.6% 61.1% 61.1% 62.8%
FAG Bearings 64.3% 63.7% 100.8% 64.3% 65.2% 65.5% 64.3%
ABC Bearings 49.1% 50.7% 47.5% 44.4% 51.0% 47.6% 39.3%
SG&A
NRB Bearings 24.0% 26.6% 28.3% 23.8% 28.8% 30.0% 32.5%
SKF India 16.8% 16.2% 15.9% 15.0% 13.0% 13.9% 13.1%
FAG Bearings 16.7% 15.4% 16.5% 16.2% 16.7% 13.3% 17.6%
ABC Bearings 20.0% 16.6% 24.7% 26.7% 22.9% 25.0% 30.1%
Employee expense
NRB Bearings 16.0% 16.7% 17.2% 16.4% 16.3% 15.6% 16.2%
SKF India 8.3% 7.4% 8.2% 7.5% 7.8% 7.4% 7.3%
FAG Bearings 7.5% 6.4% 6.5% 6.4% 7.8% 6.6% 7.8%
ABC Bearings 8.5% 6.5% 9.6% 10.2% 8.7% 13.1% 14.0%
% margins 12/31/10 3/31/11 6/30/11 9/30/11 12/31/11 3/31/12 6/30/12
EBITDA
NRB Bearings 22.1% 20.6% 19.5% 19.3% 19.8% 16.1% 15.6%
SKF India 19.6% 20.5% 20.0% 19.8% 18.1% 17.5% 16.8%
FAG Bearings 11.5% 14.5% (23.8%) 13.1% 10.3% 14.5% 10.4%
ABC Bearings 22.4% 26.2% 18.2% 18.7% 17.4% 14.3% 16.6%
EBIT
NRB Bearings 17.2% 16.0% 14.3% 14.0% 14.7% 11.1% 10.3%
SKF India 17.7% 18.7% 18.4% 18.1% 16.3% 15.8% 15.1%
FAG Bearings 9.9% 13.1% (25.4%) 11.5% 8.7% 12.8% 8.5%
ABC Bearings 20.2% 24.5% 14.8% 14.6% 13.7% 10.9% 11.8%
Net income
NRB Bearings 12.0% 10.5% 9.6% 8.3% 9.0% 8.8% 7.8%
SKF India 12.7% 13.8% 14.1% 13.6% 12.3% 12.7% 12.2%
FAG Bearings 8.1% 9.6% 8.6% 9.2% 6.7% 11.3% 8.1%
ABC Bearings 13.8% 16.0% 9.6% 10.6% 9.4% 5.6% 7.2%

7. NRB Bearings – Financial summary
7
(in INR millions except per share data)
FYE 3/31 2011A 2012A 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Net revenues 4,796 5,600 6,605 8,131 10,085 11,351 12,787 14,415 16,265 18,367 20,760
% growth 34.6% 16.8% 18.0% 23.1% 24.0% 12.6% 12.6% 12.7% 12.8% 12.9% 13.0%
Cost of goods sold 1,545 1,894 2,333 2,847 3,501 3,907 4,363 4,875 5,501 6,212 7,021
Gross income 3,251 3,706 4,272 5,283 6,583 7,444 8,424 9,540 10,764 12,156 13,739
% margin 67.8% 66.2% 64.7% 65.0% 65.3% 65.6% 65.9% 66.2% 66.2% 66.2% 66.2%
SG&A expenses 1,311 1,627 1,874 2,307 2,861 3,221 3,628 4,090 4,615 5,211 5,890
Employee expenses 853 941 1,189 1,463 1,815 2,043 2,301 2,594 2,927 3,306 3,736
EBITDA 1,087 1,138 1,209 1,513 1,907 2,181 2,495 2,856 3,222 3,639 4,113
% margin 22.7% 20.3% 18.3% 18.6% 18.9% 19.2% 19.5% 19.8% 19.8% 19.8% 19.8%
Depreciation & amortization 240 293 353 434 539 607 683 770 869 981 1,109
EBIT 846 845 856 1,079 1,368 1,574 1,812 2,086 2,353 2,657 3,003
% margin 17.6% 15.1% 13.0% 13.3% 13.6% 13.9% 14.2% 14.5% 14.5% 14.5% 14.5%
Interest expense 65 148 200 210 228 219 187 163 155 149 143
Other (income) / expenses (35) (36) (18) (22) (28) (31) (35) (40) (45) (50) (57)
Profit before tax 816 734 675 891 1,168 1,387 1,659 1,962 2,243 2,559 2,917
% margin 17.0% 13.1% 10.2% 11.0% 11.6% 12.2% 13.0% 13.6% 13.8% 13.9% 14.1%
Tax 268 225 204 269 353 419 502 593 678 773 882
Profit after tax 547 509 471 622 815 967 1,158 1,369 1,565 1,785 2,035
% margin 11.4% 9.1% 7.1% 7.6% 8.1% 8.5% 9.1% 9.5% 9.6% 9.7% 9.8%
Parent company’s share 535 499 462 609 798 948 1,135 1,341 1,534 1,750 1,995
Minority 12 10 9 12 16 19 23 27 31 36 41
EPS 5.52 5.15 4.76 6.29 8.24 9.78 11.71 13.84 15.82 18.05 20.58
Dividends paid 194 194 194 194 194 194 194 194 194 194 194
Dividend payout ratio 36.2% 38.8% 42.0% 31.8% 24.3% 20.4% 17.1% 14.5% 12.6% 11.1% 9.7%
Return analysis:
RoE 27.9% 22.6% 18.7% 21.7% 24.0% 23.7% 23.4% 22.8% 21.5% 20.4% 19.4%
RoIC 17.3% 12.0% 11.8% 12.9% 14.6% 15.7% 17.0% 17.2% 16.9% 16.5% 16.2%
Credit metrics:
Cash 91 558 26 (0) (0) (0) (0) 499 1,176 1,989 2,954
Total debt 1,140 2,575 2,451 2,834 2,913 2,594 2,125 1,988 1,915 1,841 1,767
Shareholder's equity 2,071 2,338 2,605 3,021 3,625 4,380 5,321 6,468 7,808 9,364 11,164
Total capitalization 3,210 4,913 5,056 5,855 6,538 6,973 7,445 8,456 9,723 11,205 12,932
Total debt / Total cap. 35.5% 52.4% 48.5% 48.4% 44.5% 37.2% 28.5% 23.5% 19.7% 16.4% 13.7%
Total debt / EBITDA 1.0x 2.3x 2.0x 1.9x 1.5x 1.2x 0.9x 0.7x 0.6x 0.5x 0.4x
Net debt / EBITDA 1.0x 1.8x 2.0x 1.9x 1.5x 1.2x 0.9x 0.5x 0.2x (0.0x) (0.3x)
EBITDA / Interest expense 16.6x 7.7x 6.1x 7.2x 8.4x 10.0x 13.3x 17.5x 20.8x 24.4x 28.7x

8. NRB Bearings – Valuation summary
8
52.34
71.70
74.93
40.24
51.85
72.77
84.18
90.54
54.53
70.71
DCF valuation
EV / EBITDA 2012E
EV / EBITDA 2013E
P / E 2012E
P / E 2013E
Valuation range
Current share price:
INR 37.80
1. P / E 2013E valuation based on range of +/- 1.5x the average multiple of 9.7x for the peer group.
2. P / E 2012E valuation based on range of +/- 1.5x the average multiple of 10.0x for the peer group.
3. EV / EBITDA 2013E valuation based on range of +/- 0.5x the average multiple of 6.6x for the peer group.
4. EV / EBITDA 2012E valuation based on range of +/- 1.5x the average multiple of 7.9x for the peer group.
5. DCF valuation low price based on WACC of 12.0% and terminal growth rate of 3.0%; high price based on industrial growth rate of 8.0% and
terminal growth rate of 5.0%.

9. NRB Bearings – DCF valuation
9
Terminal growth
67.62INR 3.0% 3.5% 4.0% 4.5% 5.0%
5.0% 55.65 59.10 62.99 67.43 72.52
6.5% 55.74 59.20 63.11 67.56 72.67
8.0% 55.78 59.25 63.17 67.64 72.77
9.5% 55.78 59.26 63.19 67.66 72.80
11.0% 55.72 59.21 63.14 67.62 72.77
Indutrialgrowth
Terminal growth
67.62INR 3.0% 3.5% 4.0% 4.5% 5.0%
11.0% 64.76 69.12 74.10 79.85 86.55
11.5% 58.17 61.87 66.08 70.88 76.42
12.0% 52.34 55.52 59.10 63.15 67.79
12.5% 47.15 49.90 52.97 56.42 60.34
13.0% 42.52 44.91 47.56 50.52 53.85
WACC
(in INR millions except per share data)
FYE 3/31 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E 2021E
Key drivers
Terminal growth rate: 4.5%
Automotive growth rate: 11.0%
Exports growth rate: 18.8%
Industrial growth rate: 11.0%
WACC: 11.7%
EBIT 1,021 1,311 1,701 1,940 2,202 2,503 2,788 3,100 3,506
(-) Tax 309 396 514 587 666 757 843 937 1,060
NOPAT 712 915 1,187 1,354 1,536 1,746 1,945 2,163 2,446
(+) D&A 188 202 206 240 293 353 434 539 607
(-) Capex (750) (750) (572) (626) (686) (752) (848) (958) (1,083)
(+) Changes in W.C. (278) (511) (654) (420) (476) (539) (620) (705) (802)
FCF from operations (127) (145) 167 547 667 809 911 1,039 1,168
Discount factor 0.90 0.80 0.72 0.64 0.58 0.51 0.46 0.41 0.37
Discounted FCF (114) (116) 120 352 384 416 420 429 431
Total FCF 2,322
Terminal value 6,259
Total Enterprise value 8,580
(-) Total debt 2,575
(-) Minority interest 8
(+) Cash 558
Equity value 6,554
# of share outstanding 96.923
Equity val. / share 67.62INR
% upside to current 78.9%

10. NRB Bearings – Comparable company analysis
10
(in INR millions, except per share data)
Share Price % of Equity Enterprise EV / Sales EV / EBITDA EV / EBIT P / E P / B
Company name 20-Aug-12 52-w high Value Value 2011A 2012E 2013E 2011A 2012E 2013E 2011A 2012E 2013E 2011A 2012E 2013E
NRB Bearings Ltd. 37.80 74.1% 3,664 5,690 1.02x 0.93x 0.82x 5.0x 4.9x 4.2x 6.7x 6.5x 5.2x 7.2x 6.7x 5.2x 1.6x
SKF India 617.00 84.8% 32,536 29,893 1.24x 1.19x 1.06x 10.1x 9.4x 8.2x 11.6x 10.8x 9.3x 15.6x 14.5x 12.6x 2.9x
FAG Bearings India 1,613.50 90.0% 26,812 24,966 1.92x 1.68x 1.44x 10.2x 9.4x 7.6x 11.2x 10.5x 8.4x 15.2x 14.1x 11.4x 3.3x
ABC Bearings 87.00 75.7% 1,005 1,500 0.85x 0.73x n.m. 5.1x n.m. n.m. 6.6x n.m. n.m. 6.5x 4.5x n.m. 0.8x
Mean 1.26x 1.13x 1.11x 7.6x 7.9x 6.6x 9.0x 9.3x 7.6x 11.1x 10.0x 9.7x 2.2x
Median 1.13x 1.06x 1.06x 7.6x 9.4x 7.6x 9.0x 10.5x 8.4x 11.2x 10.4x 11.4x 2.2x
High 1.92x 1.68x 1.44x 10.2x 9.4x 8.2x 11.6x 10.8x 9.3x 15.6x 14.5x 12.6x 3.3x
Low 0.85x 0.73x 0.82x 5.0x 4.9x 4.2x 6.6x 6.5x 5.2x 6.5x 4.5x 5.2x 0.8x
Multiples (based on financials from model)
NRB Bearings Ltd. 37.80 74.1% 3,664 5,690 1.02x 0.86x 0.70x 5.0x 4.7x 3.8x 6.7x 6.6x 5.3x 7.2x 7.8x 5.9x 1.6x
Note: Estimates for NRB, SKF and FAG from Batlivala and Karami research; estimates from Bloomberg for ABC Bearings.
Estimates on standalone basis for NRB.
For NRB and ABC, 2012E and 2013E indicates multiples for FYE March 31, 2013 and March 31, 2014, respectively; Multiples for calendar year for SKF and FAG.
Sales growth EBITDA margin EBIT margin Net income margin ROE
Company name 2011A 2012E 2013E 2011A 2012E 2013E 2011A 2012E 2013E 2011A 2012E 2013E 2011A 2012E 2013E
NRB Bearings Ltd. 16.8% 9.2% 13.0% 20.3% 19.0% 19.8% 15.1% 14.4% 15.7% 9.1% 9.0% 10.1% 21.8% 19.7% 21.4%
SKF India 16.8% 3.5% 12.4% 12.3% 12.7% 13.0% 10.7% 11.0% 11.5% 8.6% 9.0% 9.2% 20.6% 18.9% 18.5%
FAG Bearings India 24.9% 14.3% 16.6% 18.9% 17.8% 19.0% 17.1% 15.9% 17.2% 13.5% 12.8% 13.6% 24.1% 20.9% 20.9%
ABC Bearings (13.0%) 16.4% n.a. 16.5% n.a. n.a. 12.9% n.a. n.a. 8.7% 10.8% n.a. 12.8% n.m. n.m.
Mean 11.4% 10.9% 14.0% 17.0% 16.5% 17.3% 13.9% 13.8% 14.8% 10.0% 10.4% 11.0% 19.8% 19.8% 20.3%
Median 16.8% 11.7% 13.0% 17.7% 17.8% 19.0% 14.0% 14.4% 15.7% 8.9% 9.9% 10.1% 21.2% 19.7% 20.9%
High 24.9% 16.4% 16.6% 20.3% 19.0% 19.8% 17.1% 15.9% 17.2% 13.5% 12.8% 13.6% 24.1% 20.9% 21.4%
Low (13.0%) 3.5% 12.4% 12.3% 12.7% 13.0% 10.7% 11.0% 11.5% 8.6% 9.0% 9.2% 12.8% 18.9% 18.5%
Operational performance (based on financials from model)
NRB Bearings Ltd. 16.8% 18.0% 23.1% 20.3% 18.3% 18.6% 15.1% 13.0% 13.3% 9.1% 7.1% 7.6% 17.7% 20.2% 22.0%
Note: For NRB and ABC, 2012E and 2013E indicates multiples for FYE March 31, 2013 and March 31, 2014, respectively; Multiples for calendar year for SKF and FAG.