2 hrs ago
InCred initiates Buy on Rolex Rings, sees operating upcycle
InCred Equities thinks Rolex Rings could grow faster after several years of weak sales growth.
It gave the company a Buy rating and set a target price of ₹251.
Rolex Rings makes bearing rings and automotive components.
InCred expects more orders from the United States, Europe and India.
The company has unused factory capacity, so it may increase production without spending heavily on new facilities.
Its margins could improve as factories become busier.
Rolex Rings also ended FY26 with cash and no borrowings, according to the article.
However, a large share of its sales comes from a small group of customers, which creates risk.
Tariffs, inflation and labour shortages could also hurt its performance.
InCred Equities initiated coverage of Rolex Rings with a Buy rating and a ₹251 target price.
The target implies roughly 28% upside from ₹196.36, although the article headline describes the potential upside as 32%.
InCred expects growth from recovering United States exports, European China+1 sourcing and stronger domestic bearing-ring demand.
Rolex Rings operates at 60-65% capacity utilisation and may reach ₹1,550-1,650 crore in revenue without significant greenfield capex.
Key risks include renewed United States tariffs, customer concentration, inflation and execution difficulties, including labour shortages.
- Who
- Rolex Rings and InCred Equities.
- What
- InCred initiated coverage of Rolex Rings with a Buy rating and a ₹251 target price.
- Where
- Rolex Rings operates in India and supplies customers in the United States and Europe.
- When
- The stock closed at ₹196.36 on October 1; the forecasts cover FY27E and FY28E.
- Why
- InCred expects recovering exports, European China+1 sourcing, domestic bearing-ring demand and higher capacity utilisation to drive growth.
Bullish investment case
Risks and caution
Growth outlook
Bullish investment case
InCred expects recovering United States exports, European China+1 business and stronger domestic bearing-ring demand to support a new operating upcycle.
Risks and caution
The recovery could be weakened by renewed United States tariffs, weak industrial demand or further external disruptions.
Profitability and capacity
Bullish investment case
Unused capacity could allow Rolex Rings to increase revenue and margins without significant greenfield capital expenditure.
Risks and caution
Execution may be difficult; Q1 FY27 growth was limited to 4% partly because of a labour shortage.
Customer and balance-sheet position
Bullish investment case
The company is debt-free, cash-generative and has maintained seven of its top ten customers for more than 15 years.
Risks and caution
The top five customer groups account for approximately 65-70% of revenue, creating customer-concentration risk.
Key facts
- Brokerage view
- InCred Equities initiated coverage with a Buy rating.
- Target price
- ₹251, compared with a last trading price of ₹196.36.
- Recent performance
- The stock rose 10% in one month, 31% in three months, 66% in six months and 51% in one year.
- FY28E revenue estimate
- ₹1,531 crore, up from ₹1,143 crore in FY26.
- FY28E EBITDA margin
- InCred estimates an improvement to 22.5% from 20.1% in FY26.
- Balance sheet
- Rolex Rings ended FY26 with ₹367 crore in cash and investments and no borrowings.
- Main risks
- Renewed United States tariff pressure, customer concentration, inflation, labour shortages and execution challenges.
Quotes
InCred Equities
Brokerage providing research coverage on Rolex Rings
“Utilisation was 60-65% in FY26. On our estimates Rolex can carry INR 1,550-1,650 Cr of revenue at ~85% utilisation without material greenfield capex. Maintenance capex has run at INR 42-55 Cr against operating cash flow of INR 190-227 Cr”
livemint.com
“US auto component exports are back on track, up 31% YoY in Q1 FY27, and the largest US customer is close to its FY25 run-rate. In Europe, China+1 sourcing is turning into business, with European revenue up ~25% in FY26.”
livemint.com
Sources
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