SKF vs FAG: Bearings biggies face off (Part I) - Views on News from Equitymaster

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

SKF vs FAG: Bearings biggies face off (Part I)

Apr 4, 2011

That India has emerged one of the fastest growing economies in recent times is a foregone conclusion. The same is likely to hold true atleast for the next decade as well. Not surprisingly then, sectors like auto and industry, which are a direct play on Indian economy, will also continue to do well. Infact, by virtue of their growth prospects, they have the capacity to leave even the Indian economic growth far behind.

The bearings industry, which derives a lot of its demand from the automobile sector and few of the other manufacturing sectors, is also likely to see good times ahead. Quite naturally then, investors would be keen to profit from this trend by buying shares in companies that manufacture bearings. But which bearings company can turn out to be a good investment from a long term perspective? We will make an attempt to answer the same through this series.

Over the next few articles, we will compare SKF India and FAG Bearings, two of the biggest bearings companies in India and try and make it easy for you to bet on the horse most likely to win this long term race.

An overview of the Indian bearings industry

Every machine or product that moves or rotates more often than not has bearings in it. Bearings help in reducing friction between moving parts thereby facilitating movement with optimal use of energy. Ball bearings are the most commonly used bearings commanding around 60% of the total bearing market followed by taper roller bearing which accounts for 25% of the total industry size.

The Indian Bearing market can primarily be divided into 2 sectors - Automotive and Industrial. Each of these segments may further be sub divided into OEM & End Users. Original Equipment Manufacturers (OEM) are the major users of bearings in India with about 60% market share while the end user segment contributes to the remaining. Within the OEM's, the Automobile segment consumes the largest share of bearings followed by the industrial sector.

The supply structure within the bearing industry is dominated by the domestic bearings manufacturers who account for 75% of the total demand. Balance is met through imports. Imports constitute both supplies of niche products not manufactured in India as also cheap imports from neighbouring nations.

As far as threats are concerned, steel and alloy steel constitutes the single largest component of the cost of bearings. Hence, margins of bearings manufacturers are susceptible to movement in steel prices. Another threat is that of cheap low quality imports. It should be noted that many of these imported bearings are being sold in the market as spurious bearings. As per estimates, these account for 20%-30% bearings sold in the replacement market. However, as technology improves and awareness increases, spurious bearings should see destruction of demand in the years to come.

Thus the fortune of bearings sector is a critical indicator of the direction in which the economy is moving. In the next article we will focus on how the topline growth of two of the biggest names in the sector viz. SKF and FAG Bearings has moved over the past few years and what factors have been responsible for the same.

SKF vs FAG Bearings biggies face off Article Series - Next | All Articles


Equitymaster requests your view! Post a comment on "SKF vs FAG: Bearings biggies face off (Part I)". Click here!

5 Responses to "SKF vs FAG: Bearings biggies face off (Part I)"

Hardik Parmar

Dec 15, 2018

FAG is better then SKF on paper and practically too, their Spherical roller bearing all are in X LIFE where SKF doesn't,X life means there load carrying capacity is much more then Regular bearing with same prices.FAG every bearing Fatigue load limit is also higher then SKF in every size of bearing,
which means FAG using a good standard Steel compare to SKF.

Like (2)

Gopal

Nov 14, 2012

Do not mix up FAG Bearing in India with Schaeffler India
and SKF with the total SKF in India. SKF Technologies India, is not part of SKF India Ltd. No comparision can be made on book value ,eps, pe etc.

Like (2)

nsk

Jul 7, 2011

So what industry FAG contributes to

Like (3)

Sandeep

Apr 7, 2011

SKF being an oldest manufacturer of bearings is king of the bearing market when compared to FAG, though the prices of SKF bearings are higher , which pays for QUALITY, as compared to FAG and other bearing manufacturers.

Like (6)

ramawatar saraogi

Apr 4, 2011

fag bearing should outsmart skf when we consider the relevant parameters like book value,eps,pe etc.

Like (6)
  
Equitymaster requests your view! Post a comment on "SKF vs FAG: Bearings biggies face off (Part I)". Click here!

More Views on News

AUTO CORP. OF GOA Announces Quarterly Results (3QFY20); Net Profit Down 125.4% (Quarterly Result Update)

Jan 27, 2020 | Updated on Jan 27, 2020

For the quarter ended December 2019, AUTO CORP. OF GOA has posted a net profit of Rs 14 m (down 125.4% YoY). Sales on the other hand came in at Rs 536 m (down 40.2% YoY). Read on for a complete analysis of AUTO CORP. OF GOA's quarterly results.

ZF STEERING Announces Quarterly Results (3QFY20); Net Profit Down 112.6% (Quarterly Result Update)

Jan 20, 2020 | Updated on Jan 20, 2020

For the quarter ended December 2019, ZF STEERING has posted a net profit of Rs 11 m (down 112.6% YoY). Sales on the other hand came in at Rs 639 m (down 41.5% YoY). Read on for a complete analysis of ZF STEERING's quarterly results.

SKF INDIA 2018-19 Annual Report Analysis (Annual Result Update)

Dec 16, 2019 | Updated on Dec 16, 2019

Here's an analysis of the annual report of SKF INDIA for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of SKF INDIA. Also includes updates on the valuation of SKF INDIA.

CARBORUNDUM UNIVERSAL 2018-19 Annual Report Analysis (Annual Result Update)

Sep 30, 2019 | Updated on Sep 30, 2019

Here's an analysis of the annual report of CARBORUNDUM UNIVERSAL for 2018-19. It includes a full income statement, balance sheet and cash flow analysis of CARBORUNDUM UNIVERSAL. Also includes updates on the valuation of CARBORUNDUM UNIVERSAL.

Sandhar Technologies IPO: Worth Betting on This Automotive Component Manufacturer? (IPO)

Mar 17, 2018

Should you subscribe to the IPO of Sandhar Technologies Ltd?

More Views on News

Most Popular

How to Buy the Best Safe Stocks in 2020 (The 5 Minute Wrapup)

Jan 17, 2020

Don't fall for the safe stocks narrative going around in the stock market these days.

Guess Which Stocks Are Rising at Double the Speed of Sensex (Profit Hunter)

Jan 15, 2020

These stocks can move twice as fast as the Sensex - to take advantage of their money multiplying power get in now as the rally is still just taking shape.. read more to not miss out.

For 1,000%+ Gains, Follow the 8-Year Cycle in the Stock Market (Fast Profits Daily)

Jan 17, 2020

This is how the biggest trading profits are made.

What the Infosys Results Tell Us About the Next Infosys (The 5 Minute Wrapup)

Jan 15, 2020

If you're interested in the next Infosys, I'll tell you where to look.

The Best Asset Class to Invest in 2020 (Fast Profits Daily)

Jan 24, 2020

Why I'm most bullish on this asset class above all else in 2020.

More

India's #1 Trader
Reveals His Secrets

Secret To Increasing Your Trading Profits Today
Get our special report, Secret to Increasing Your Trading Profits Today Now!
We will never sell or rent your email id.
Please read our Terms

COMPARE COMPANY

MARKET STATS