Buy SKF India, target price Rs 4600: JM Financial

JM Financial has buy call on SKF India with a target price of Rs 4600. The current market price of SKF India Ltd. is Rs 4243. Time period given by analyst is one year when SKF India Ltd. price can reach defined target.

SKF India Ltd., incorporated in the year 1961, is a Mid Cap company (having a market cap of Rs 20975.04 Crore) operating in Auto Ancillaries sector.

SKF India Ltd. 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 30-06-2022, the company reported a Consolidated Total Income of Rs 1063.65 Crore, up 2.16 % from last quarter Total Income of Rs 1041.15 Crore and up 51.96 % from last year same quarter Total Income of Rs 699.94 Crore. Company reported net profit after tax of Rs 129.18 Crore in latest quarter.

Investment Rationale
The brokerage expect the company to clock sales/EPS CAGR of 15%/21% over FY22-25E as it expects a) ramp up in annual capex to increase localisation levels (at 57% currently) and improve margins, b) market share gains through participation in future freight wagon tenders (90,000 wagons order on anvil), c) dealer network expansion in industrial segment and launch of e marketplace to curb counterfeit sales and d) higher share of aftermarket (45-50%) vs peers to provide resilience in sales as well as margins. It upgrades to BUY (vs HOLD) with revised TP of INR 4,600, as we value the company at 35x Sep’24 EPS.

Promoter/FII Holdings
Promoters held 52.58 per cent stake in the company as of 30-Jun-2022, while FIIs owned 6.47 per cent, DIIs 28.56 per cent.