TIMKEN - Fundamental Analysis: Financial Health & Valuation

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

Fundamental Rating: 4.0

📊 Core Financials Breakdown

Profitability

ROCE: 20.9% and ROE: 17.0% — strong indicators of efficient capital deployment.

EPS: ₹60.5 — robust, though quarterly PAT dipped from ₹187 Cr. to ₹104 Cr., reflecting a profit contraction of 44%.

Quarterly Profit Variation: 8.21% — relatively stable earnings trend.

Balance Sheet Strength

Debt-to-equity: 0.01 — virtually debt-free, which enhances financial resilience.

Dividend Yield: 1.18% — modest but consistent.

Institutional Sentiment

FII holding dropped by 1.24%, while DII increased by 0.88% — mixed signals, possibly reflecting short-term caution.

💰 Valuation Metrics

Metric Value Insight

P/E Ratio 50.4 Matches industry average — fairly valued on earnings.

P/B Ratio ~8.07 High, but typical for high-margin industrials.

PEG Ratio 4.64 Elevated — suggests valuation is stretched relative to growth.

Intrinsic Value ~₹2,700–₹2,850 (est.) Current price of ₹3,051 is slightly above fair value.

🧠 Business Model & Competitive Edge

Core Operations: Precision bearings, mechanical power transmission, and industrial motion products.

Strengths

High-margin niche in industrial components.

Strong brand and global OEM relationships.

Near-zero debt and consistent dividend policy.

Challenges

Recent earnings dip and high PEG ratio.

RSI at 55.6 and MACD at -2.63 — neutral to mildly bearish technicals.

📈 Entry Zone & Technicals

DMA 50: ₹3,050, DMA 200: ₹3,089 — price is hovering near both, indicating consolidation.

RSI: 55.6 — neutral zone.

MACD: -2.63 — bearish crossover.

📌 Entry Zone: ₹2,850–₹2,950 — ideal for accumulation if price softens.

🕰️ Long-Term Holding Guidance

Outlook: Analysts expect FY2025 EPS of ₹441–₹445, with FY2027 EPS projected at ₹535–₹540

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Holding Strategy: Suitable for long-term investors seeking exposure to industrial automation and motion control. Monitor earnings recovery and institutional activity for re-entry signals.

Let me know if you'd like a comparative breakdown with SKF India or Schaeffler to round out your view.

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