SKFINDIA - Investment Analysis: Buy Signal or Bull Trap?
Back to ListInvestment 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 |
📊 SKFINDIA shows strong fundamentals for long-term investment. Valuations are attractive with P/E at 23.1 vs industry average of 49.5, while ROE (21.4%) and ROCE (28.8%) indicate excellent efficiency. EPS at 109 ₹ provides strong earnings visibility, and PEG ratio at 1.82 suggests growth is reasonably priced. Dividend yield at 0.77% adds minor income support. Debt-to-equity is 0.00, reflecting a debt-free balance sheet. Quarterly PAT declined slightly (-2.04%), but overall profitability remains stable. Technicals are neutral with RSI at 51.2 and MACD negative (-7.24), suggesting consolidation near current levels. The stock is trading closer to its support zone, offering a margin of safety for accumulation.
💡 Ideal Entry Zone: 1,750 ₹ – 1,850 ₹ (near support levels and below DMA 50/200). Current price (1,870 ₹) is close to fair entry, but dips toward 1,750 ₹ offer better margin of safety.
📈 Exit Strategy: If already holding, maintain long-term position given strong ROE/ROCE and debt-free status. Consider partial profit booking near 2,300–2,350 ₹ (resistance zone close to highs). Holding period of 3–5 years is recommended for compounding returns, with stop-loss near 1,720 ₹.
Positive
- 📌 Efficiency: Strong ROE (21.4%) and ROCE (28.8%).
- 📌 Valuation: Attractive P/E (23.1) vs industry average (49.5).
- 📌 Balance Sheet: Debt-free (0.00 debt-to-equity), ensuring financial stability.
- 📌 EPS: 109 ₹ provides strong earnings visibility.
Limitation
- ⚠️ Profitability: Quarterly PAT declined slightly (-2.04%).
- ⚠️ Dividend Yield: Low at 0.77%, modest for income investors.
- ⚠️ Technical: MACD negative (-7.24) shows weak momentum.
- ⚠️ Liquidity: Trading volumes are relatively low compared to peers.
Company Negative News
- 📉 Slight decline in quarterly PAT (46.7 Cr. → 41.3 Cr.).
- 📉 DII holdings reduced (-0.27%), showing weaker domestic investor sentiment.
Company Positive News
- ✅ EPS at 109 ₹ supports valuation strength.
- ✅ Debt-free balance sheet enhances financial resilience.
- ✅ FII holdings increased slightly (+0.03%), showing marginal foreign investor interest.
Industry
- ⚙️ Industrial engineering and bearings sector benefits from manufacturing growth and infrastructure expansion.
- ⚙️ Industry PE at 49.5 shows sector valuations are higher, making SKFINDIA relatively undervalued.
Conclusion
🔎 SKFINDIA is a strong candidate for long-term investment given attractive valuations, high ROE/ROCE, and debt-free status. Ideal entry is near 1,750–1,850 ₹. Investors already holding can aim for 3–5 years of compounding returns, with profit booking near highs and strict risk management.
Would you like me to also prepare a peer benchmarking overlay comparing SKFINDIA with other industrial engineering companies like Schaeffler India and Timken India to highlight relative strengths and safer long-term opportunities?