TIMKEN - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

Investment Rating: 3.1

📊 Fundamental Analysis

Strengths

Excellent Return Metrics

ROCE: 20.9% and ROE: 17.0% — strong indicators of capital efficiency and profitability.

Low Debt (D/E: 0.01): Virtually debt-free, which adds resilience in downturns.

EPS of ₹60.5: Solid earnings base for a mid-cap industrial player.

Dividend Yield: 1.14%: Modest but better than many growth stocks.

Strong Industry Position: Timken is a global leader in bearings and mechanical power transmission — benefits from industrial capex cycles.

Concerns

High Valuation

P/E: 52.2 vs Industry PE of 48.7 — premium pricing.

PEG Ratio: 4.80 — extremely high, suggesting overvaluation relative to growth.

Weak Technicals

RSI: 35.6 — nearing oversold, but not yet reversing.

MACD positive but flattening — momentum is weak.

Price below 50 DMA and near 200 DMA — short-term bearish.

FII Selling (−1.24%): Mild foreign investor caution.

PAT Decline: ₹104 Cr vs ₹187 Cr — sharp drop, possibly cyclical.

💡 Is It a Good Long-Term Investment?

Cautiously yes. Timken has strong fundamentals and a dominant position in its niche. However, current valuations are stretched, and earnings volatility raises concerns. It’s a solid long-term play only if entered at a more reasonable price.

🎯 Ideal Entry Price Zone

Fair Value Zone: ₹2,600–₹2,800 Aligns with historical support and offers better valuation comfort.

Aggressive Entry: ₹2,200–₹2,400 Near 52-week low — ideal for long-term investors with high conviction.

🧭 Exit Strategy / Holding Period

If you already hold the stock

Holding Period: 3–5 years to ride industrial capex cycles and margin expansion.

Exit Strategy

Partial Exit near ₹4,200–₹4,400 if valuations remain high without earnings growth.

Full Exit if ROE drops below 12% or PEG stays above 3.0 for multiple quarters.

Re-evaluate if RSI crosses 80 or MACD turns sharply negative — could signal exhaustion.

Would you like a valuation comparison with SKF India, Schaeffler, or NRB Bearings to assess Timken’s relative positioning in the industrial bearings space?

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