2 SKFINDIA share price target reports by brokerages below. See what is analyst's view on SKFINDIA share price forecast, rating, estimates, valuation and prediction behind the target. You may use these research report forecasts for long-term to medium term for your investment or trades in 2020.
Recovery, particularly in the auto segment, is still hazy in terms of velocity and magnitude. Till that time, share of traded goods will remain high and will put pressure on margins for SKF. AT the same time, the stock at 31x FY21E discounts well a recovery in auto and also takes into account the quality of balance sheet the company possess. In lieu of high multiple, we believe the stock does offer attractive risk reward. One should wait for better entry points in the stock. We maintain our REDUCE rating on the stock with a target price of Rs 1840.
Valuation & Outlook: Weakness in auto sales is expected to act as a spoilsport on the performance of bearing companies like SKF. Being the largest bearings supplier (~28% market share) with significant auto exposure (45-50% of sales), auto demand remains a key overhang. Capital investment plans for FY20E are expected in the range of | 80-130 crore depending on the near term automotive segment performance. There has been a robust pick-up in industrial performance. However, the resultant increase in traded goods would cap margins and, hence, potential upside. In addition, declining topline growth is expected to result in negative operating leverage. Accordingly, we expect sales and EBITDA CAGR of 4.2%, 2.2%, respectively, in FY19-21E. We value the company at 24x P/E on FY21E EPS to arrive at a target price of | 1565/share. We revise our recommendation on the stock to REDUCE.
SOURCE: Data from D'Market via Quandl. Intraday data delayed 15 minutes.
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