NRB Bearings: Why the Stock Has Not Delivered Returns Despite Market Leadership?

Synopsis: Despite holding ~60% market share in needle bearings and presence in over 90% of Indian vehicles, NRB Bearing’s stock is down 10.58% YoY, weighed by 57.8% promoter pledging, modest growth, and stretched working capital.

NRB Bearings has been recording steady revenue growth over recent periods, reflecting a consistent demand for its products and stable operational performance. Despite this upward trend in sales, the company’s stock has shown limited movement in the market, drawing attention from investors and analysts alike. The situation raises questions about the factors influencing market sentiment and how financial performance translates or fails to translate into shareholder returns.

NRB Bearing Limited, with a market capitalization of Rs. 2,326.63 crore, closed at Rs. 240.05 per equity share, down by 4.11 percent from its previous day’s close price of Rs. 250.35 per equity share.

NRB Bearing Limited has delivered returns across multiple timeframes, with a 1-month return of -14.69 percent, a 3-month return of -9.07 percent, and a 6-month return of -20.87 percent The stock has delivered a -10.58 percent return in the past 1 year and in the longer frame of 5 years it has delivered a return of 123.61 percent.

NRB Bearings Limited, founded in 1965 and based in Mumbai, manufactures and sells a wide range of ball and roller bearings for both domestic and international OEMs. Its product portfolio includes needle bearings, roller bearings, thrust bearings, special ball bearings, bearing cages, crank pins, planetary shafts, and other specialized components, primarily serving the automotive and mobility sectors. The company operates through its subsidiaries as well.

Rather than diversifying into multiple unrelated products, the company has built deep specialisation in bearings, supplying components that are used across two-wheelers, passenger vehicles, commercial vehicles, and industrial applications. This narrow but deep focus allows NRB Bearings to remain relevant across internal combustion, hybrid, and electric vehicle platforms.

Market Leadership

NRB Bearings is a clear market leader in its core segments. In needle roller bearings, the company holds around 60 percent market share in India. In cylindrical roller bearings, it commands around 30 percent market share by value and about 50 percent by volume. These numbers indicate not only leadership in premium applications but also mass usage across vehicle categories. Its bearings are present in more than 90 percent of vehicles running on Indian roads, highlighting deep penetration and long-standing customer relationships.

Revenue Mix & Order Book

The company earns the majority of its revenue from India, while exports contribute about 24 percent of total revenue. This export presence spans 43 countries, giving NRB access to global OEMs and Tier-1 suppliers. While exports provide scale and technical learning, they also expose the company to global demand cycles and policy risks, adding another layer of uncertainty for investors.

NRB Bearings has already secured more than Rs. 600 crore worth of lifetime orders linked to EV and hybrid vehicle platforms. These are long-term supply contracts that last for the full production life of the vehicle platforms. While this provides revenue visibility and confirms the company’s relevance in next-generation mobility, the benefit of such orders is realised gradually over several years rather than immediately, which limits short-term earnings acceleration.

Why Has the Stock Underperformed?

High Promoter Pledge

One of the key concerns weighing on the stock is promoter share pledging. As of September 2025, 57.84 percent of promoter shares are pledged. Such a high level of pledge often creates discomfort among investors, as it raises concerns around financial leverage at the promoter level and the risk of forced selling during adverse market conditions.

Slow Revenue & Profit Growth

Despite its strong market position, NRB Bearings has delivered relatively modest growth. Revenue grew at a CAGR of 9.56 percent over one year and 8.33 percent over three years. These growth rates suggest steady but not high-growth performance, which limits market excitement, especially in a sector where investors often look for faster compounding.

Profit trends have been uneven. Profit declined sharply with a negative CAGR of 65.91 percent over one year, while over a three-year period, profit increased at a modest CAGR of 2.87 percent. This inconsistency in profitability weakens earnings visibility and affects valuation multiples, even if the underlying business remains operationally sound.

Cash Conversion Cycle

Another operational concern is the company’s cash conversion cycle of 332 days. This indicates that a large amount of cash is tied up in inventory, receivables, or working capital. Such a long cycle can strain cash flows and reduce financial flexibility, especially during periods of slower demand or rising costs.

Declining Institutional Confidence

Institutional ownership trends also reflect caution. DII shareholding declined from 17.08 percent in September 2024 to 12.27 percent in September 2025. A reduction in domestic institutional participation often signals concerns around growth visibility, governance risks, or capital efficiency, even if the core business remains stable.

Customer Concentration Risk

NRB Bearings is also seeing rising customer concentration. The top customer contributes 12 percent of revenue, up sharply from 4 percent earlier, while the top five customers together account for 26 percent of revenue. This reflects deeper relationships and larger order sizes, but it also increases dependence on a smaller set of customers, making the business more sensitive to changes in their production plans or sourcing decisions.

Financials

The company reported steady revenue growth in Q2FY26, with revenue rising to Rs. 325 crore, compared with Rs. 302 crore in Q2FY25, reflecting a YoY growth of about 7.6 percent. On a sequential basis, revenue increased from Rs. 310 crore in Q1FY26, translating into a QoQ growth of roughly 4.8 percent, indicating stable demand momentum and gradual scaling of operations quarter-on-quarter.

Profitability metrics also showed consistent improvement. EBITDA stood at Rs. 54 crore in Q2FY26, up from Rs. 52 crore in Q2FY25, marking a YoY growth of nearly 3.9 percent, while sequentially it rose from Rs. 51 crore in Q1FY26, a QoQ increase of about 5.9 percent. 

Net profit strengthened more sharply, reaching Rs. 41 crore in Q2FY26, compared with Rs. 36 crore a year ago, delivering a YoY growth of around 13.9 percent, and improving significantly from Rs. 33 crore in Q1FY26, resulting in a strong QoQ growth of approximately 24.2 percent, highlighting better operating leverage and margin expansion.

A return on equity (ROE) of about 12.7 percent and a return on capital employed (ROCE) of about 15.9 percent, and debt to equity ratio at 0.14 demonstrate the company’s financial position. The stock is currently trading at a P/E of 16.7x lower as compared to industry P/E of 28.1x.

NRB Bearings remains a technically strong company with leadership in a critical component category and confirmed participation in future EV and hybrid platforms. However, factors such as high promoter pledging, modest revenue growth, volatile profits, stretched working capital, declining DII ownership, and rising customer concentration have collectively prevented the stock from delivering meaningful returns. The business shows stability and relevance, but the market appears to be waiting for clearer signs of sustained growth, stronger cash flows, and improved balance-sheet comfort before re-rating the stock.

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