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SKF India Target - | 1448
• SKF India is the largest bearing manufacturer in India with an
overall market share of ~28%. Known for deep groove ball
bearings (forming ~35% of revenues and ~45% market share),
SKF has an equal presence across the industrial (46% of sales)
and automotive segment (54% of sales), spread across OEMs
(55% of sales) and aftermarket
• We believe that SKF, with leadership in the bearing space,
commands scalability bandwidth coupled with a lean balance
sheet and is poised to capture the opportunity arising from the
revival of demand in the automotive segment. Consequently, we
expect SKF’s manufactured product (auto) sales to exhibit
~14.6% CAGR over CY13-16E. We also expect import substitution
of industrial bearings, through ramp up in SKF Technologies, to
be a key revenue driver for SKF’s revenues and margin expansion
as SKF would improve its turnaround time. Consequently, we
expect industrial sales to grow at 11.3% CAGR over CY13-16E
• Going ahead, with an anticipated recovery in end user industry,
we expect revenues to bounce back at 13.4% CAGR over CY13-
16E and margins to recover to 13.6% in CY16E vs. 11.5% in CY13,
driving earnings growth at a CAGR of 24% in CY13-16E. A healthy
balance sheet, robust cash flow generation, strong parentage &
product profile/ strong distribution reach are other key positives.
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