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New auto emission regulations offer significant gain to FAG bearings

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With Germany’s Schaeffler Group promoting FAG brand of bearings, analysts expect it to outpace its very own historical performance and the industry pertaining to revenue growth in the near future. With stricter emission regulations being implemented, those desiring to purchase new vehicles are likely to feel the pinch. However, bearings companies can find it to be boon to increase their revenue aspects.

 

About fag bearing

 

Being listed in the NSE, it is among the largest bearing supplier in the passenger vehicle segment and is all set to take advantage from the increased demands for nex-gen bearing that contribute towards low emissions, achieved through improving vehicle performance.

 

With deadlines for implementation of emission rules drawing closer, automakers can be expected to move towards nex-gen bearings that can open up plethora of revenue opportunities for component manufacturers. But the highest benefit is likely to be made by FAG, as it is currently the market leader especially in passenger vehicle segment, with volume visibility being the highest among all manufacturers present in the automobile segment.

 

The passenger car segmented is expected to grow and this company can increase its revenue from last fiscal year’s 16.7% to 18.9% in 2020. The total revenue market share of this company during last fiscal year was about 15%. The financial year is said to end in December. As the latest generation of bearings has been stated to be about 2.5 to 3 times more expensive when compared to the conventional types, there will be changes which can ensure that the company is able to better margins and average realization.

 

Analysts also expect that bearings content to increase from the current Rs. 3,000 to Rs. 4,000 for each vehicle in 2020. This is another aspect which is just perfect for this segment. The company also enjoys better market positioning when compared to peers because of reduced sourcing of goods from parent for selling in local market and to derive enhanced margins on all traded products.

 

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Checking out the FAG catalogue can help find out that a new plant has been commissioned in Gujarat at Savli with investments being made tuning to about Rs. 400 crore. The generation potentiality of this plant is around Rs. 1,000 crore at peak utilization in revenue. With the new plant being used to its optimum combined with enhanced proportion of new generation bearings in the product mix, the company can improve its margins. 17.7% is the operating margin of last year.

 

Moreover, the company is expected to benefit immensely from increase in usage of the technologically advanced better bearings in railways and trucks. There are plans made by the government to upgrade its existing railway infrastructure through projects like high speed trains, metros, dedicated freight corridors, all of which is expected to contribute to double the bearings’ demand from railways. Companies of this sector are likely to enjoy gains.

 

Contacting the FAG distributor can help derive superior quality bearings to fit specific requirements and needs at discounted rates.


Creation date: Nov 29, -0001 4:00 pm     Last modified date: Sep 14, 2019 1:45 am   Last visit date: Oct 11, 2019 6:24 am