SKFINDIA - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 19 Sept 25, 2:16 pm

Fundamental Rating: 4.2

📊 Core Financials Analysis

Profitability

ROE: 21.4% and ROCE: 28.8% — excellent, indicating strong capital efficiency and operational performance.

EPS: ₹106 — robust, though quarterly PAT dropped from ₹203 Cr to ₹119 Cr (−25.4%), suggesting short-term earnings volatility.

Debt-to-equity: 0.00 — debt-free, a major strength for financial resilience.

Dividend & Cash Flow

Dividend Yield: 0.30% — modest, consistent with a growth-oriented reinvestment strategy.

Strong cash flows supported by high-margin industrial components and efficient working capital.

📉 Valuation Indicators

Metric Value Interpretation

P/E Ratio 45.0 Slightly undervalued vs industry PE of 50.4

P/B Ratio ~9.11 High, but justified by strong ROE

PEG Ratio 3.54 Overvalued relative to growth

Intrinsic Value ₹3,789 (est.)

1

Current price ~26% above fair value

🧠 Business Model & Competitive Edge

Company Profile: SKF India Ltd is a leading manufacturer of bearings, seals, lubrication systems, and mechatronics, serving automotive, industrial, and aerospace sectors.

Strengths

Global brand with high technical expertise and product reliability.

Strong presence in OEM and aftermarket segments.

Asset-light, debt-free model with high return ratios.

Challenges

Recent profit contraction and high PEG ratio.

FII holding declined (−0.66%), suggesting cautious sentiment.

Valuation appears stretched relative to intrinsic value

1

.

According to Stocks-Buy, SKF India is considered an “Economical performer” with strong fundamentals but currently overpriced. Price targets for 2025 range from ₹3,712 to ₹4,840, with long-term projections reaching ₹6,392 by 2027

2

.

📈 Technical & Sentiment Overview

RSI: 56.1 — neutral to mildly bullish.

MACD: 46.8 — strong momentum, trend continuation likely.

DMA 50 & 200: Price above both — confirms long-term uptrend.

Volume: Slightly above average — steady investor interest.

💡 Entry Zone & Long-Term Guidance

Suggested Entry Range: ₹4,000–₹4,200 — closer to intrinsic value and technical support.

Holding Strategy

Ideal for long-term investors seeking exposure to industrial automation and manufacturing excellence.

Price targets for FY27 range from ₹5,973 to ₹6,392; long-term targets for FY30 could reach ₹8,000+.

Monitor margin trends, export growth, and capex cycles.

SKF India is a high-quality industrial play with strong fundamentals and global pedigree. If you're building a portfolio focused on durable manufacturing leaders, this one deserves a strategic allocation.

1

www.alphaspread.com

2

stocks-buy.com

Edit in a page