X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2018 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.
SKF India: Fair performance - Views on News from Equitymaster

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

MidCapSelect
  • MyStocks

MEMBER'S LOGINX

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

SKF India: Fair performance
Jul 21, 2014

SKF India announced its results for the quarter and half year period ended June 2014. During the quarter, the company reported a 6% YoY and 18% YoY growth in revenues and profits respectively. Here is our analysis of the results.

Performance summary
  • Net sales up by 6% YoY during the quarter.
  • Operating profits up by 18% YoY as margins expand by 1.3% YoY. Margin expansion is largely due to lower other expenses and input costs (as a percentage of sales).
  • Net profits up by 18% YoY led by an improvement in operating performance.
  • 1HCY14 revenues and profits up by 7% YoY and 44% YoY respectively (10% YoY when adjusted for extraordinary items).

Financial snapshot
(Rs m) 2QCY13 2QCY14 Change 1HCY13 1HCY14 Change
Revenues 5,674 6,014 6.0% 11,027 11,809 7.1%
Expenditure 5,025 5,249 4.4% 9,784 10,321 5.5%
Operating profit (EBDITA) 649 765 17.8% 1,243 1,487 19.6%
Operating profit margin (%) 11.4% 12.7%   11.3% 12.6%  
Other income 155 189 21.4% 302 349 15.6%
Depreciation 119 135 13.6% 236 267 13.5%
Exceptional items - -   (221) - NA
Profit before tax 686 819 19.4% 1,089 1,569 44.1%
Tax 227 277 22.1% 371 537 44.6%
Profit after tax/(loss) 459 541 18.0% 717 1,032 43.9%
Net profit margin (%) 8.1% 9.0%   6.5% 8.7%  
No. of shares (m)       52.7 52.7  
Basic earnings per share (Rs)          37.6  
P/E ratio (x) *         28.1  
* trailing 12 months earnings

What has driven performance in 2QCY14?
  • SKF India's revenues were up by 6% YoY during the quarter ended June 2014. Operating profits were up by 18% YoY aided by lower input costs and other expenses (as a percentage of sales). Net profits were up by 18% YoY led by a strong operating performance.

    (Rs m) 2QCY13 2QCY14 Change 1HCY13 1HCY14 Change
    RM costs 3,534 3,716 5% 6,894 7,297 6%
    % of sales 62.3% 61.8%   62.5% 61.8%  
    Employee benefit expenses 466 495 6% 998 1,009 1%
    % of sales 8.2% 8.2%   9.0% 8.5%  
    Other expenses 1,025 1,037 1% 1,893 2,015 6%
    % of sales 18.1% 17.2%   17.2% 17.1%  
    Total expenses 5,025 5,249 4% 9,784 10,321 5%

  • SKF's performance during the six month period ended June 2014 was decent. The company reported a 7% YoY growth in revenues, while profits were up by 44% YoY (unadjusted). Operating margins expanded to 12.6% as compared to 11.3% as all expense heads were lower as a percentage of sales during the period. Adjusting for extraordinary expense (VRS expenses), profits are up by 10% YoY during 1HCY14.
What to expect?
At the current price of Rs 1,055, the stock of SKF India is trading at a multiple of about 28.1 times its trailing twelve month earnings and at about 20 times our CY16 estimates. While there has been no specific correspondence from the company's side yet regarding its results, we shall put up an update if we get more information.

We maintain our 'Buy at lower price' view on the stock given the higher valuations.

To Read the Full Story, Subscribe or Sign In


Small Investments
BIG Returns

Zero To Millions Guide 2018
Get our special report, Zero To Millions
(2018 Edition) Now!
We will never sell or rent your email id.
Please read our Terms

SKF INDIA SHARE PRICE


Sep 19, 2018 03:37 PM

TRACK SKF INDIA

  • Track your investment in SKF INDIA with Equitymaster's Portfolio Tracker. Set live price alerts, get research alerts and more. Get access now...
  • Add To MyStocks

SKF INDIA 8-QTR ANALYSIS

COMPARE SKF INDIA WITH

MARKET STATS