SKFINDIA - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 4.0
| Stock Code | SKFINDIA | Market Cap | 9,252 Cr. | Current Price | 1,870 ₹ | High / Low | 2,396 ₹ |
| Stock P/E | 23.1 | Book Value | 558 ₹ | Dividend Yield | 0.77 % | ROCE | 28.8 % |
| ROE | 21.4 % | Face Value | 10.0 ₹ | DMA 50 | 1,902 ₹ | DMA 200 | 2,051 ₹ |
| Chg in FII Hold | 0.03 % | Chg in DII Hold | -0.27 % | PAT Qtr | 41.3 Cr. | PAT Prev Qtr | 46.7 Cr. |
| RSI | 51.2 | MACD | -7.24 | Volume | 34,891 | Avg Vol 1Wk | 71,809 |
| Low price | 1,652 ₹ | High price | 2,396 ₹ | PEG Ratio | 1.82 | Debt to equity | 0.00 |
| 52w Index | 29.3 % | Qtr Profit Var | -2.04 % | EPS | 109 ₹ | Industry PE | 49.5 |
📊 Financials: SKF India demonstrates strong fundamentals with EPS at 109 ₹. ROE of 21.4% and ROCE of 28.8% reflect excellent efficiency in capital utilization. Debt-to-equity at 0.00 highlights a debt-free balance sheet, strengthening financial stability. Quarterly PAT stood at 41.3 Cr. compared to 46.7 Cr. previously, a -2.04% variation, showing slight earnings pressure but overall profitability remains solid. Dividend yield of 0.77% adds moderate investor appeal.
💹 Valuation: Current P/E of 23.1 is significantly below the industry average of 49.5, suggesting undervaluation. Book Value of 558 ₹ gives a P/B ratio of ~3.35, moderately expensive but justified by strong returns. PEG ratio of 1.82 indicates growth is slightly lagging valuation. Intrinsic value appears higher than current market price, making SKF India attractively valued relative to peers.
🏢 Business Model & Health: SKF India operates in the industrial engineering and bearings sector, serving automotive, manufacturing, and industrial clients. Competitive advantage lies in brand strength, technological expertise, and diversified product portfolio. Overall health is robust with strong profitability, debt-free status, and efficient capital utilization, though short-term earnings volatility needs monitoring.
🎯 Entry Zone: Current price of 1,870 ₹ is closer to its lower range (1,652 ₹) than its 52-week high (2,396 ₹). RSI at 51.2 suggests neutral momentum. A good entry zone would be around 1,750–1,820 ₹, offering favorable risk-reward balance.
📈 Long-Term Holding Guidance: SKF India is suitable for long-term holding given its strong fundamentals, debt-free balance sheet, and undervaluation relative to industry peers. Investors can accumulate at current levels or on dips, with confidence in sustained demand from automotive and industrial sectors.
Positive
- 📈 Strong ROE (21.4%) and ROCE (28.8%).
- 💹 Debt-free balance sheet (Debt-to-equity 0.00).
- 🏢 Leading brand in bearings and industrial engineering.
- 📊 Attractive P/E (23.1) vs industry average (49.5).
Limitation
- ⚠️ Quarterly PAT decline (-2.04%).
- 📉 Moderately expensive P/B ratio (~3.35).
- 📊 PEG ratio (1.82) indicates growth lagging valuation.
- 💸 Dividend yield of 0.77% is modest.
Company Negative News
- 📉 Decline in DII holdings (-0.27%).
- ⚠️ Short-term earnings pressure with PAT decline.
Company Positive News
- 📈 Increase in FII holdings (+0.03%).
- 💹 Strong brand presence and diversified product portfolio.
Industry
- ⚙️ Industrial engineering and bearings sector supported by automotive and manufacturing demand.
- 📊 Industry PE at 49.5, highlighting SKF India’s undervaluation compared to peers.
Conclusion
⚖️ SKF India is a fundamentally strong, debt-free company with efficient returns and undervaluation relative to industry peers. Entry is advisable around 1,750–1,820 ₹. Long-term investors can hold confidently, with growth driven by automotive and industrial demand.
Would you like me to also prepare a peer comparison with Timken India and Schaeffler India to highlight SKF India’s relative valuation and performance in the bearings sector?