Buy SKF India, target price Rs 5200: JM Financial

JM Financial has buy call on SKF India with a target price of Rs 5200. The current market price of SKF India is Rs 4329. Time period given by analyst is 12 months when SKF India price can reach defined target.

SKF India, incorporated in the year 1961, is a Mid Cap company (having a market cap of Rs 21357.20 Crore) operating in Auto Ancillaries sector.

SKF India key Products/Revenue Segments include Bearings & Components, Sale of services, Other Operating Revenue and Scrap for the year ending 31-Mar-2022.

Financials
For the quarter ended 31-03-2023, the company has reported a Consolidated Total Income of Rs 1114.46 Crore, up 2.22 % from last quarter Total Income of Rs 1090.23 Crore and up 7.04 % from last year same quarter Total Income of Rs 1041.15 Crore. Company has reported net profit after tax of Rs 122.85 Crore in latest quarter.

The company’s top management includes Mr.Manish Bhatnagar, Mr.Shailesh Sharma, Ms.Ingrid Viktoria Van Camp, Mr.Aldo Cedrone, Mr.Gopal Subramanyam, Ms.Anu Wakhlu. Company has Price Waterhouse & Co Bangalore LLP as its auditors. As on 31-03-2023, the company has a total of 5 Crore shares outstanding.

Investment Rationale
The brokerage expects SKF to clock sales/EPS CAGR of12%/18% over FY23-25E as it expects ramp up in annual capex to increase localisation levels (at 57% currently) and improve margins; market share gains through participation in future freight wagon tenders (26,000 in FY24BE vs 21,000 in FY23RE)' and higher share of aftermarket (45-50%) vs peers to provide resilience in margins.

Promoter/FII Holdings
Promoters held 52.58 per cent stake in the company as of 31-Mar-2023, while FIIs owned 6.51 per cent, DIIs 29.03 per cent.