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Musketeer
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Joined: 12/Feb/2008
Location: India
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Posts: 310
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   Topic: SKF India
Posted: 16/Feb/2008 at 6:33pm |
SKF India is the country's leading supplier of bearings. The key verticals to which SKF India supplies are:
1) Automotive
2) General Engineering (machine tool, electrical, power transmission)
3) Heavy Industries (Steel plants, paper mills)
4) Railways
Increasingly, wind energy is becoming an important focus area for the company.
Following is the snapshot of the financial performance over the last 4 years. (nos. are in Rs. millions except for some ratios etc.)
| |
2007 |
2006 |
2005 |
2004 |
2003 |
2002 |
| Sales |
15683 |
13425 |
7814 |
5813 |
4670 |
4072 |
| Sales per Employee |
|
6.6 |
4 |
3 |
2.4 |
2 |
| Operating Profit |
2911 |
1460 |
1024 |
869 |
555 |
440 |
| PBT |
2474 |
1531 |
1031 |
883 |
506 |
330 |
| PAT |
1607 |
1020 |
641 |
566 |
322 |
204 |
| Total Borrowings |
|
1 |
2 |
65 |
463 |
889 |
| EPS in Rs. |
30.5 |
19.3 |
12.2 |
12.5 |
7.1 |
4.5 |
| Cash EPS in Rs. |
|
24 |
17 |
18 |
13 |
11 |
| Book Value in Rs. per share |
|
80 |
66 |
67 |
47 |
43 |
| ROCE |
|
36 |
29 |
28 |
19 |
12 |
| RONW |
|
24 |
18 |
22 |
15 |
10 |
| Fixed Asset Turnover Ratio |
|
7.3 |
5.3 |
4.7 |
3.6 |
2.8 |
| Working Capital as % of Sales |
|
18 |
26 |
34 |
30 |
37 |
| Rate of Dividend (% p.a.) |
|
45 |
35 |
25 |
25 |
20 |
* For the financial year ending Dec, 2007, whatever figures are available have been provided.
| CMP |
355 |
| Market Cap |
18234.2 |
| TTM P/E |
11.6 |
| CAGR for Sales (2002-2006) |
36% |
| CAGR for PAT (2002-2006) |
50% |
Bearings is the core business and contributes to more than 90% of the revenues (as of financial year ending Dec, 2006).
Four other engineering platforms - Seals, Mechatronics, Reliability Services, Lubrication Systems, contribute the rest.
Size of the bearing industry in India is estimated to be Rs.50,000 million.
The stated intent of the company is to change the revenue mix where bearings will contribute less than 80% of the total revenues.
Exports contributed 5.2% of the total sales and are mostly to the affiliates of the SKF group worldwide.
In the organised sector of the bearing industry of India, SKF India increased its market share from 28% in Dec, 2005 to 30% in Dec, 2006.
The ratio of inventory to sales improved from 17.8% in 2005 to 11.3% in 2006.
The ratio of receivables to sales improved from 13.2% in 2005 to 12.3% in 2006.
Company's website: http://www.skf.com/portal/skf_in/home
DISCLAIMER: I hold SKF India in my portfolio.
Edited by Musketeer - 20/Feb/2008 at 8:05pm
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Vivek Sukhani
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Posted: 16/Feb/2008 at 6:38pm |
Have you checked out FAG's results for this quarter? Does it have any linkage with the sectoral performance in your opinion. I am asking you as you keep peer comparision in mind.
I am asking this as I expect that you dont pick up stocks on random like I do by looking athe 3 pages of Annual report. So, how does this company stack with a FAG or a Timken india.
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Musketeer
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Posted: 16/Feb/2008 at 6:51pm |
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* For the financial year ending Dec, 2007, results are yet to be announced. |
Lets wait for the results. In case you know something about FAG/ Timken, I would be glad to know.
Edited by Musketeer - 16/Feb/2008 at 6:52pm
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basant
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Posted: 16/Feb/2008 at 7:07pm |
Some querries:
1) What is the forecasted growth rate for the next 2-3 years?
2) What is the threat from imports. I was told a few years back that there is a huge difference between the branded stuff and the ones that come through sea from China?
3) Also quote the source of data whereever possible.
We will put this in the emerging companies section
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Musketeer
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Joined: 12/Feb/2008
Location: India
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Posted: 16/Feb/2008 at 7:28pm |
Originally posted by basant
Some querries:
1) What is the forecasted growth rate for the next 2-3 years?
2) What is the threat from imports. I was told a few years back that there is a huge difference between the branded stuff and the ones that come through sea from China?
3) Also quote the source of data whereever possible.
We will put this in the emerging companies section |
1. I'm expecting 30-35% growth for the next 2-3 yrs. Lets see if Dec quarter results are in line with it.
2. True, even the management has recognized the threat from cheap imports and the unorganised sector. It is trying to move into higher value added services, process optimisation.
They've set up an Application Development Centre in B'lore to participate with the customers at an early stage for new product development. This they feel will effectively counter the threat in the OEM space as customer would better appreciate a continuously involved partner for a total solution. Another thing to look out in the results would be the contribution of non-bearing segment in the revenues.
3. All the data (except for the 9 months ended Sep, 2007) has been picked up from the Annual Report for the year ended Dec, 2006. The exceptional data has been compiled from NSE website.
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catcall
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Posted: 16/Feb/2008 at 7:35pm |
Though this sector is interesting, it does not have a good "moat" , due to which sales and pricing power has not moved in line with the Industry ( note that the products SKF manufacture are used by almost all industries , which in normal circumstances shold have seen a multiplyer effect on sales, ) .. This has not happened.
Incidentally, was one of Sharekhans picks, I am not sure that is so any more....
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Musketeer
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Posted: 16/Feb/2008 at 8:41pm |
The sales kicker will come in thro' additional capacities.
The capacity in B'lore had been enhanced in the recent past.
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kulman
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Location: India
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Posted: 16/Feb/2008 at 9:13pm |
SKF's German parent wanted to delist the company 3 years back but didn't get response.
Somehow they haven't been able to command pricing power as expected from a leading Brand.
It's a good business..bearings. They need replacement after few thousands of hours of running.
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