SKF India
Printed From: The Equity Desk
Category: Investment Ideas - Creating winning portfolios!
Forum Name: Emerging companies - Mid caps that can become large cap
Forum Discription: These are companies operating in growing markets having have certain niches or specific attributes like new sector plays. These are emerging multibaggers with high risks and high rewards.
URL: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1599
Printed Date: 07/May/2025 at 4:40am
Topic: SKF India
Posted By: Musketeer
Subject: SKF India
Date Posted: 16/Feb/2008 at 6:33pm
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SKF India is the country's leading supplier of bearings. The key verticals to which SKF India supplies are: 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.)
* For the financial year ending Dec, 2007, whatever figures are available have been provided.
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 - http://www.skf.com/portal/skf_in/home DISCLAIMER: I hold SKF India in my portfolio.
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Replies:
Posted By: Vivek Sukhani
Date 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. |
Posted By: Musketeer
Date Posted: 16/Feb/2008 at 6:51pm
Lets wait for the results. In case you know something about FAG/ Timken, I would be glad to know. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: basant
Date Posted: 16/Feb/2008 at 7:07pm
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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 ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Musketeer
Date Posted: 16/Feb/2008 at 7:28pm
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.
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: catcall
Date Posted: 16/Feb/2008 at 7:35pm
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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.... ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: Musketeer
Date Posted: 16/Feb/2008 at 8:41pm
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The sales kicker will come in thro' additional capacities.
http://www.skf.com/skf/news/html/popup.jsp?lang=en&contentId=598743&updateProfileLocale=true - SKF to invest 400 crores, to double sales by 2011.
The capacity in B'lore had been enhanced in the recent past. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: kulman
Date Posted: 16/Feb/2008 at 9:13pm
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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.
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Vivek Sukhani
Date Posted: 16/Feb/2008 at 9:19pm
| Fasteners, rivets, bearings, nuts, bolts, screws etc. all need to replaced....that ways stream is quite continuous. |
Posted By: kulman
Date Posted: 16/Feb/2008 at 9:53pm
Yes Sir!
In fact I'm looking for those spare parts for myself as people say about me: he's lost bearing....he's a dheela nut and all that...
------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: smartcat
Date Posted: 16/Feb/2008 at 1:42am
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I generally avoid MNC companies. They act as if somebody put a gun on their heads and asked them to list in the stock exchanges. Always trying to delist - somewhat similar to how the Indian cricket team reacts (We Are Going Back Home) when things don't go their way. Most of the MNC companies make me feel unwanted with their 'delisting' and 'open offer' attitudes.
Otherwise, seems to be a good business to invest in. The revenues seem to be a bit lumpy though. I guess revenues keep spiking up with new capacity going onstream every 2 - 3 years.
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Posted By: Vivek Sukhani
Date Posted: 16/Feb/2008 at 7:31am
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thats hugely true.....its for the same reason that my dad doesnt like MNCs....he thinks 5 years down the line most of them would delist themselves.
Unfortunately though, I am a poor man.......I want my companies to throw cash, in whatever form. And these companies, and SKF is not a part of that list, are doing that. I was comparing SKF with FAG and FAG's financials appear much improved although my friend had called me to say the quarterly were disappointing. Somehow, these bearing companies have an issue with dividends. FAG earns so much and distributes so little. Timken also earns a decent income but doesnt distribute at all. SKF's dividend is also pathetic. I know one thing...even though I will mentally prepare myself for buying a few tickets of FAG/SKF/Timken, when the hour of reckoning, i.e. time to press the order will come, instead of FAG, my fingers will press FOSECO.......good things always seem to elude me!!!!!
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Posted By: Musketeer
Date Posted: 16/Feb/2008 at 7:58am
In my view, delisting/ acquisition should not be the primary criterion for investing in a stock (although I myself did that for CBoP and would not repeat it). Nor should it be the criterion for avoiding a stock.
If the business has grown well, has the potential to grow well, the opportunities exist and the management seems committed, it makes a strong case.
Pricing power ... even I want to find out if it has gone up or come down. How did you infer that?
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: catcall
Date Posted: 16/Feb/2008 at 9:25am
From the improvement /or lack of it in market rates... It's like this, some ten years back , for equipments fitted with a particular brand of bearing, it was almost always a propreitory buy... that's no more the case now and bearings, unless they are tailor made for a large equipment, have equivalents of the same types in other brands also and the rates therefore have to be very competiive, since there no particular brand has any techncal advantage over the other , in fact we normally float tenders to selected vendors to finalise ARC Contracts for these items mainly on a lowest cost basis... which is why i said that there is no "moat" advantage, the increase in bottom line is only through higher top line growth... ------------- There are two times in a man's life when he should not speculate-when he can't afford it and when he can-Happy investing! |
Posted By: Musketeer
Date Posted: 18/Feb/2008 at 12:01pm
True, for a number of its products, SKF India would be competing only on the basis of cost. But I guess that would happen to any firm that is in an industry that has matured. There'll be competitors offering the same product and hence pricing pressure would come in.
But continuous spending on R&D, being the first mover in newer opportunities within the industry could help address pricing pressure upto an extent.
E.g. 1) the products that they supply in the Power Transmission segment complement their bearings portfolio,
2) special emphasis on Wind Turbines
Such measures could perhaps mean the firm is trying to differentiate itself. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 20/Feb/2008 at 8:00pm
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SKF India announced Q4 (Dec 2007) and annual FY2007 results today.
Here is the snapshot of quarterly performance.
I'll update the first post in this topic with the latest annual figures, whichever are available at this point. (Figures are in Rs. lakhs)
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 20/Feb/2008 at 8:47pm
Or should higher margins be attributed only to better operational efficiencies, which nevertheless are important? ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 20/Feb/2008 at 8:57pm
| i liked the dividend payout this time....60 p.c. is okay......!!! |
Posted By: Musketeer
Date Posted: 20/Feb/2008 at 10:08am
Ok, let me try to answer this myself.
Pricing power could've been inferred if the number of units sold was lesser than the previous quarter. But that seems unlikely, so the margins have expanded becoz of better operational effciency. This is no doubt a positive. SKF India's new capacity will start contributing this year, which could provide a sales kicker and if they're able to maintain the improved margins, the EPS could easily see a growth of 35-40% this year.
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: basant
Date Posted: 20/Feb/2008 at 10:14am
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Companies that grow bottomline without corresponding increase in topline normally hit a road block after a few years. Classic example is HUL! I'd better invest in a company which is growing topline faster then the bottomline because sooner or later as the fixed cost gets distributed over larger number of units profits start growing in faster after a while. ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Musketeer
Date Posted: 20/Feb/2008 at 10:22am
Very good point, Basant Sir.
Then I think you'd always prefer service-oriented companies than manufacturing companies because of scalability. Manufacturing companies, in a growth phase, would experience capacity bottlenecks and need to expand capacity (capital intensive) to achieve sales growth. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: basant
Date Posted: 20/Feb/2008 at 10:31am
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By the inherrent nature of its activities India's strength lies in services and not manufacturing. Even if you see the GDP break up services grows the fastest; the biggest money Infy, Wipro, Bharti, Pantaloon etc have been made in services so I am biased towards this sector but as you rightly said being capex light is a great point of strength in a business model.
------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Musketeer
Date Posted: 21/Feb/2008 at 10:44am
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ShareKhan has come out with a BUY report on SKF India with a price target of 475.
If someone has access to the report, could you please post the contents of the report here? ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: atulbull
Date Posted: 22/Feb/2008 at 1:22pm
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Skf India is setting up a new
facility at Ahmedabad to manufacture large size bearings that cater to growing
sectors of wind energy, mining, steel and off-road applications. This ·
Once this large
size bearings plant goes on stream, the company’s expanded product line ensures
that its dependence on the automobile sector, especially the two-wheelers
segment, will automatically go down, thereby expanding its basket of reach and
risk. This plant will supply to both the domestic as well as export market. The global demand for large size bearings is on the upswing.
The fact that its parent company, SKF, is putting up a similar plant in ------------- Price is what you pay.Value is what you get. |
Posted By: Musketeer
Date Posted: 25/Feb/2008 at 9:48pm
If you look at the ratio of Working Capital/ Sales, it has been improving from the year 2002 to 2007. Would it be correct to say SKF has been moving towards a model which is capex light? ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: basant
Date Posted: 25/Feb/2008 at 10:14pm
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Manufacturing by the very nature of the business requires capex you can just tweak the same by a very small degree . ------------- 'The Thoughtful Investor: A Journey to Financial Freedom Through Stock Market Investing' - A Book on Equity Investing especially for Indian Investors. Book your copy now: www.thethoughtfulinvestor.in |
Posted By: Musketeer
Date Posted: 26/Feb/2008 at 5:02pm
But its not just a small tweak, the ratio has been almost halved from 2002 to 2006. I'm waiting for the detailed report on this year's performance. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 03/Apr/2008 at 12:54pm
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This could be an interesting buy around 250 levels. Even though its not a strong growth story like retail and banking, but its still a pretty neat business to own. Maybe I'm coming back to this because I've tracked it for a couple of years (it was one of the first few companies I bought).
A couple of points:
1) Book Value on Dec 31, 2007 = Rs. 100
2) P/E (TTM basis, @ 250) = 8.28
3) Negligible debt
4) Strong brand name in its industry, though "moat" doesn't exist. They're reducing the dependence on automotive sector, new plant @ Ahmedabad to cater to industrial segment where margins are higher. Waiting for the annual report to find out the revenue mix for year ended Dec 31, 2007.
5) Dividend (Rs. 6 per share), yield @ 250 = 2.4%
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What do folks say? I know its not a very glamorous stock but its a slow, steady and efficient performer. Wanted TEDdies' opinion so that I have an objective view. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: smartcat
Date Posted: 03/Apr/2008 at 1:34pm
| Right now, lots of stocks are at mouth-watering valuations. A stock like SKF should trade at TTM P/E of 12 - 15, but is at 9. A stock like TCS should trade at a minimum TTM P/E of 20 (mega sized companies like IBM/Accenture with limited growth opportunities are trading at 15) but is trading at 15. |
Posted By: Musketeer
Date Posted: 03/Apr/2008 at 2:22pm
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That is very true, a lot of stocks are at interesting valuations. But comparison with TCS (which has a lot of concerns - dependence on US, $ vs. Re, quality-manpower crunch, can grow at 25%)...don't know if it is right. SKF India may be considered a proxy play for India's infra, automobile sector, hence its domestic demand driven.
- It has expected growth rates of 30% or above. PEG of 0.28
- Would be 2.5 times book value @ 250.
- Dividend yield may protect downside.
To me, it looks like right mix of value and growth. I could be wrong, though. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 11/Apr/2008 at 11:52am
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" Risk is a product of ambition, competence and the environment. Every business has a risk and entrepreneurs are not risk averse. The business strategy adopted by SKF to sustain growth, retain leadership position and at the same time improve operational efficiency makes us susceptible to various risks. We cushion this spirit of entrepreneurship by formulating strong risk management policy to anticipate potential downslides and build mitigation plans. We institute risk risk management committee which is led by risk manager and other members operating in different business, unit and functions"...........
" At SKF, Risk Committee is in pursiot of 'finding the risk before the risk finds us'."......
( Excerpts from the Management Discussion and Analysis as provided in the Annual report of SKF India Limited for the Year Ended 31.12.2007)
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This company has done things in such a manner that suggests fitting the right nut in the right hole. Turnover has expanded at the rate of 35 % CAGR in the period 2003 to 2007 from rs. 467 crores to rs. 1568.3 crores. PAT has expanded at 49 p.c. CAGR from Rs. 32.2 crores to 160.7 crores. The company is totally debt-free, is sitting on 236.3 crores of cash. The company is expanding by building up capacities and setting up new plants. They are setting up a plant at Haridwar to move closer to the Autocos. They are going to set up a plant at Ahmedabad for industrial bearings which will be the AB SKF group's third plant in Asia. This is likely to be ready by Q2 2009.
At a CMP of 300, the stock is trading at 10 times its reported EPS of 30.5 for the Calendar Year 2007. At worst, unless something very untoeard happens, there appears to be very little downside for this company.
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Posted By: Vivek Sukhani
Date Posted: 12/Apr/2008 at 3:55pm
I dont think you shall ever take SKF as a quarter to quarter play. Its more a call on the replacement demand shifting from unorganised sector to organised sector. As far as bearings go, SKF is spanning across all. Also their new plant in Ahmedabad will get more aggressive with the newly identified industries like wind-power etc.
Also, I believe they are trying to put major thrust on services business to keep the momentum going. That also goes on to improve sales based profitability ratios. Also, they are trying to get into lubrication systems which also serves the purpose of increasing profitability.
If you look at their 5-pillars: Bearings, Seals, mechatronics, services and lubrication systems, you can spot the thrust on value rather than volume.
However, your point of order is acceptable. However, is that not getting reflected in price, is all that I am asking.
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Posted By: tigershark
Date Posted: 12/Apr/2008 at 4:18pm
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i own skf, hence your inputs help.now whether to increase or not below 300 is the question.but i do agree that between 280-300 ther is strong support. ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: Musketeer
Date Posted: 12/Apr/2008 at 5:08pm
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Gentlemen, may I request you to continue discussing on SKF on its thread here: http://www.theequitydesk.com/forum/forum_posts.asp?TID=1599 - SKF India
It'll be difficult for other interested boarders like me to locate the messages elsewhere.
BTW, I too think SKF offers growth at a very reasonable price.
Vivek, when did you receive SKF's annual report for year ending Dec 31, 2007? I've been waiting for it. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 12/Apr/2008 at 8:19am
Okay man, will also post in case I have anything more to say on that thread.
Buddy, I received that Annual Report about 10 days back. It makes great reading let me tell you. I would also like to read FAG's Annual report and compare it with SKF.
When I was in my college, I was told that figures must be like that which must speak to you. When I look at SKF, I can establish instant connect with the philosophy and performance of the company.
Also, I was scouting hard for fresh ideas as I am nearing my fill for Foseco, Voiths and some of my favorite companies. Glaxo Consumer is not falling hard and thats what is stopping me. Now I have got this gem to add on.
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Posted By: tigershark
Date Posted: 13/Apr/2008 at 1:51pm
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the 400 crs expansion isit thru skf india the listed co or thru the subsidiary also what happened to their delisting plans.these guys plan to double turnover by 2011,can np and eps also keep pace? ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: Vivek Sukhani
Date Posted: 13/Apr/2008 at 3:06pm
| Tiger Sir, if you have a firm opinion that they will be doubling turnover in 3-4 years, dont think too much about such issues. I dont see too much reason for such a debate on a company which has given so much to investors( in terms of operating results). Thanks Tiger, for putting up this information. It has made my calculations a lot more lucid. |
Posted By: tigershark
Date Posted: 13/Apr/2008 at 4:25pm
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visit http://www.skf.com/portal/skf_in/home - www.skf.com/portal/skf_in/home where you can read what i posted. ------------- understanding both the power of compound return and the difficulty getting it is the heart and soul of understanding a lot of things |
Posted By: Musketeer
Date Posted: 13/Apr/2008 at 4:39pm
Thanks, for your inputs.
Strangely, I haven't received the Annual Report as yet.
Could you please let me know what is the revenue mix for the year ended Dec 31, 2007? Specifically, what %age is contributed by bearings, what %age by sales to automotive segment?
Also, if you could please post the operating and balance-sheet numbers like:
Cash EPS, Book Value, ROCE, RONW, Fixed Asset Turnover Ratio, Working Capital as % of Sales.
Basically, these numbers will complete the chart that I've put on page 1 of this thread till the year 2007.
If you're unable to find time for this, no problem. I'll do the same and update this thread when I get the Annual Report. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 13/Apr/2008 at 4:40pm
| thanks a lot tiger.....how much downside do you see for this company. I believe Level 1 can be done now. In any case, there will always be the support of a buy-back should anything go wrong. What do you say? |
Posted By: Musketeer
Date Posted: 13/Apr/2008 at 4:51pm
And going by their track record, I find these guys are cautiously aggressive. Vivek put up a v. good line from their annual report:
"They find risk before risk finds them".
They have consistently improved each operating parameter in the last 5 years. I expect them to atleast maintain, if not grow, the margins alongwith sales growth.
Also, note that Uttarakhand offers some additional tax benefits. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Vivek Sukhani
Date Posted: 13/Apr/2008 at 4:55pm
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Cash EPS( Pg 5 of the Annual Report): Rs. 36
Book-Value per share( Pg 5 of the annual Report): Rs. 103
RoCE:45 p.c. ( pg 55 of the Annual report)
RoNW:29 p.c.( Pg 55 of the Annual Report)
Fixed Asset Turnover Ratio: 8 times ( Pg 54 of the Annual report)
Inventories to Sales: 10.5 p.c.( Pg 54 of the Annual report)
Receivables to Sales: 13.1 p.c. ( Pg 54 of the Annual report)
Turnover is approx 1563 crores. Of this, 43 p.c. is of traded goods and 57 p.c. is of manufactured goods. The traded goods is entirely Ball bearings, Roller Bearings. Of the manufactured goods, 94.5 p.c. is Ball Bearings, roller Bearings. The rest is Semi Processed Products and Textile Machinery Components.
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hope, it helps.
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Posted By: Musketeer
Date Posted: 13/Apr/2008 at 5:07pm
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Thanks, indeed, for taking time to post these numbers, Vivek.
It does help.
ROCE improved from 36% in FY 06 to 45% in FY 07.
RONW improved from 24% in FY 06 to 29% in FY 07.
Fixed Asset Turnover Ratio improved from 7.3 in FY 06 to 8 in FY 07.
Inventories to Sales Ratio improved from 11.3 in FY06 to 10.5 in FY 07.
Receivables to Sales Ratio marginally deteriorated from 12.3 in FY 06 to 13.1 in FY 07.
What does the "Working Capital to Sales Ratio" convey? I think it conveys how capex intensive or light the firm has become. Please share your thoughts on this and also post the Working Capital to Sales Ratio for 2007. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 13/Apr/2008 at 5:15pm
It would be interesting to know if they would be manufacturing any kind of products that they currently import and what would the local manufacture of such products do to the margins as compared to their import? ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: kulman
Date Posted: 13/Apr/2008 at 8:13pm
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I have heard from industry sources that many OEMs import a lot of SKF bearings via their distributor(s) in Singapore. And this doesn't get accounted in SKF India's sales/profits. While this is unconfirmed, those interested may wish to dig further into it. Note: I've nothing against SKF. It's a great company, good brand leadership. ------------- Life can only be understood backwards—but it must be lived forwards |
Posted By: Vivek Sukhani
Date Posted: 13/Apr/2008 at 9:20pm
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By working capital, I am assuming net working capital adjusted for cash. Net Current Assets are standing at 353.71 crores. cash and bank balance is 236.30 crores. therefore, NCA adjusted for cash is 117.41 crores.Net sales are standing at 1568.3 crores.
therefore this WCap to Sales ratio is standing at 7.49 p.c.
As far as WCap to sales ratio is concerned, I believe WCap to Cost of Sales is a better measure. That provides us with insights about operating cycle.
Frankly speaking, I dont get into operating cycles. What gives me maximum pleasure is the cash flow from operations. For SKF, that has increased from 126.35 crores to 133.7 crores. Even though it appears very marginal, but then the company has paid about 40 crores more in tax this year compared to last year.
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Posted By: Janak.merchant1
Date Posted: 13/Apr/2008 at 9:25pm
And i have met a person who makes and exports bearing from Baroda to SKF's for their global requirements. Niche bearings. ------------- I love my money, not my opinion. So i am ready and willing to change my opinion for the sake of protecting my money. |
Posted By: Musketeer
Date Posted: 14/Apr/2008 at 7:19pm
Thats something I had also heard of. Some years ago, some of the OEMs had concerns that dealing with SKF India to get the imports was more cumbersome/ time consuming. In last year's annual report, the MD had said they've put processes in place to become a one-stop shop for all the needs of customer be they procurement of imported SKF products or local SKF products.
But no harm in grilling them more about it.
Au haan, sajjan logo ko disclaimer likhne ki zaroorat nahin
Would you have an idea of the size(turnover) of the exports to SKF from this unit?
But thanks, indeed, for information like this.
------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 15/Apr/2008 at 3:15pm
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What are the support levels for SKF, if one wants to buy some? I've never done any technical analysis. BTW, results to be declared on Apr 23. ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Musketeer
Date Posted: 28/May/2008 at 10:58am
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Bought some SKF at 262.
P/E (TTM) of just 8. At the very least I expect SKF to grow by atleast 15% this year and by atleast 20% next year, when their industrial bearings plant gets commissioned. Further, tax benefits from their new plant in Uttarakhand will add a bit more to the bottomline.
Cash per share of Rs. 36.
P/BV of 2.5 ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: balloon
Date Posted: 02/Jun/2008 at 7:49pm
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The plant coming up in Gujarat will fall under the aegis of a separate entity called SKF Technologies India Pvt. Ltd., a direct subsidiary of the parent company. To that extent, i dont think SKF India will reap any benefit from this new plant. Further, in its 2005 Annual Report the company mentioned about a new initiative Direct Customer Delivery. As per this, companies that used to place orders with SKF Singapore, now do so through SKF India. This earns a tidy little commission for SKF India and a substantial topline growth. The share of trading (to the extent of 39%) is primarily on that account. Now, what we do not know is, whether after commissioning of the new plant in Gujarat: 1). the need for imports will vanish? 2). whether the sales will be routed through SKF India? 3). Since a major portion of industrial bearings (read: large-sized) will be met by this unlisted company, will SKF India not miss out on a significant growth opportunity? |
Posted By: Musketeer
Date Posted: 02/Jun/2008 at 8:02am
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Thanks, balloon.
Could you also convey the source of this information?
Though the Uttaranchal plant was said to be under SKF India, I couldn't find any info about the industrial bearings plant nr. Ahmedabad.
If what you say is correct, then SKF India will miss out on the growth kicker supposed to be provided by the new plant
 ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: balloon
Date Posted: 02/Jun/2008 at 8:27am
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http://www.thehindubusinessline.com/2007/06/08/stories/2007060804150200.htm You can also check the annual reports of SKF India and SKF AG for the same. |
Posted By: Musketeer
Date Posted: 17/Jul/2008 at 10:36pm
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Lacklustre results from SKF for the quarter ended June 30, 2008.
(figures in crores) ------------- Be fearful when others are greedy. Be greedy when others are fearful. |
Posted By: Alok Bhola
Date Posted: 08/Apr/2010 at 9:49am
| http://epaper.livemint.com/ArticleImage.aspx?article=09_04_2010_014_003&mode=1 - SKF India rises on parent's plans to grow in the local market |
Posted By: samirarora
Date Posted: 08/Apr/2010 at 10:01am
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Wonderful company and will go places (all good ones)
Earning per share was actually Rs23, but they used some funds for one time expenses like VRS. Book value as of dec 2009 is 136.00.
Total employees are 1915 down from 2078 from previous year. New MD this year, as previous MD is now head of SKF Asia.
Zero Debt company and market leader , esp. in terms of brand. ------------- |
Posted By: Alok Bhola
Date Posted: 08/Apr/2010 at 10:05am
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Although I have not yet done a deep study of the two companies, from whatever I have observed I could not figure out the reason of the huge valuation premium SKF India enjoys over FAG Bearings (almost 50%). |
Posted By: samirarora
Date Posted: 08/Apr/2010 at 10:13am
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The latest annual report of SKF india mentions the following 3 running plants...
Bommasandra, Bangalore
Chinchwad, pune
Salempur , haridwar.
Elsewhere in the report it mentions two more plants coming up.
BTW, Skf is now also into lubricants and seals other than the bearing business and is also offering Value added products such as consultation etc. which they term as mechatronics.
Nice day to be talking about SKF as its going to do a 52 week high today for sure! ------------- |
Posted By: Ajith
Date Posted: 08/Apr/2010 at 10:29am
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Alok Bhola, SKF is a world leader,FAG is not. ------------- Ajith |
Posted By: samirarora
Date Posted: 08/Apr/2010 at 10:33am
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Actually, both SKF and FAG are at the top, skf being a swedish group while FAG is from Germany and both enjoy immense brand recognition...
its more to do with the indian operations itself and also balance sheet and no. of shares and shareholder perception.
SKF is ex dividend since 7th,BTW and i think so is FAG.- just in case anyone wants to know ------------- |
Posted By: Ajith
Date Posted: 08/Apr/2010 at 10:45am
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samirarora, SKF based in Sweden is the world leader in bearings. FAG based in Germany is one of the leading bearing companies in the world. SKF has a much wider range of bearings. So SKF in India ought to have the higher PE. ------------- Ajith |
Posted By: Alok Bhola
Date Posted: 08/Apr/2010 at 11:39am
Still that does not justify a hefty 50% P/E premium. Moreover, FAG India appears to be better managed compared to SKF India (Avg 4-yr NPM of FAG at 10.2% is much higher than the avg NPM of 7.3% for SKF India). Further, over the past 5 yrs, FAG has grown its EPS by 19% vs just 11% for SKF India. In addition, its easier for FAG to increase its India market share from the present 15% compared to SKF that already has a mkt share of about 30%. |
Posted By: siddharth
Date Posted: 08/Apr/2010 at 11:46am
| Some of the difference could be because of the liquidity differences. Assuming all other factors to be same one would choose to invest in SKF as it is easier to exit when one wants, which could be difficult for a big position in FAG |
Posted By: samirarora
Date Posted: 09/Apr/2010 at 3:05pm
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Posted By: Alok Bhola
Date Posted: 23/Apr/2010 at 1:24pm
My query got answered today after both the companies released their Mar10 qtr results. After the significantly better quarterly figures by SKF, the valuation premium shrunk from 50% to 20% in one shot. Hence, it seems the primary reason for the huge trailing valuation difference was that the market was correctly able to anticipate the quarterly results of the two companies. It correctly anticipated the very high YoY EPS growth for SKF and nearly flat EPS for FAG. |
Posted By: Alok Bhola
Date Posted: 26/Apr/2010 at 10:12am
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The valuation gap has widened back to 40% over the past 2 trading sessions due to a spurt in the price of SKF. Its early to say if the reason is market anticipation of much better earnings over the coming quarters as well, or if the market is simply excited over the last quarter's figures. |
Posted By: Ajith
Date Posted: 27/Apr/2010 at 10:26pm
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Alok Bhola, As I posted earlier SKF has access to wider range of products/technology,will deliver better results as economy revives and will enjoy better PE. ------------- Ajith |
Posted By: Alok Bhola
Date Posted: 28/Apr/2010 at 9:04am
FAG also has access to the latest products and technology from its German parent. Further, factors like liquidity etc mentioned earlier in this thread might justify about 20% premium but not 40-50% premium. Such a high premium can only be justified by a much higher growth expectation in near future, which seems to be the case here. |
Posted By: Ajith
Date Posted: 29/Apr/2010 at 7:39am
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Alok Bhola, Good.I have some SKF.Auto boom could be the reason for higher growth expectations. ------------- Ajith |
Posted By: commnman
Date Posted: 23/Feb/2011 at 7:02pm
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FAG catching up with SKF?
Both the companies have come out with results. A common-size matrix analysis of SKF v/s FAG follows... (Note: PAT excludes exceptional items) Total Income up 16.6% to 546.36 Cr from 468.69 Cr. Total Income up 21.4% to 266.20 Cr from 219.34 Cr. EBIDTA up 36.5% to 68.51 Cr from 50.20 Cr. EBIDTA up 91.8% to 52.22 Cr from 27.22 Cr. PAT up 41.3% to 43.93 Cr from 31.10 Cr. PAT up 121%. to 36.31 Cr from 16.45 Cr. EBIDTA margin is 12.54% V/s 10.71% (DQ-09) and 12.13% (SQ-10) EBIDTA margin is 19.62% V/s 12.41% (DQ-09) and 17.65% (SQ-10) PAT margin is. 8.04% V/s 6.63% (DQ-09) and. 7.69% (SQ-10) PAT margin is 13.64% V/s 7.50% (DQ-09) and 11.54% (SQ-10) Cost of goods sold as a %ge to Income is 63.78% V/s 67.68% (DQ-09) and 64.58% (SQ-10) Cost of goods sold as a %ge to Income is 55.25% V/s 63.19% (DQ-09) and 57.56% (SQ-10) Other expenses including Employees cost as %ge to income is 23.68% v/s 21.61% (DQ-09) and 23.29% (SQ-10) Other expenses including Employees cost as %ge to income is 25.14% v/s 24.40% (DQ-09) and 24.78% (SQ-10) Tax Rate is 33.30% v/s 33.28% Tax Rate is 30.92% v/s 32.42% (Note: SKF net profit helped by Interest earned which is up 79% to 6.15 Cr v/s 3.44 Cr) Full Year 2010 v/s 2009: Total Income up 32.1% to 2093.17 Cr from 1584.05 Cr. Total Income up 28.1% to 1048.59 Cr from. 818.65 Cr. EBIDTA up 58.4% to 279.43 Cr from 176.44 Cr. EBIDTA up 52.0% to 188.68 Cr from 124.11 Cr. PAT up 59.5% to 177.02 Cr from 111.01 Cr. (Interest earned up 61.1% to 19.98 Cr v/s 12.4 Cr) PAT up 61.0% to 124.06 Cr from. 77.06 Cr. Reported Full Year EPS is 33.60 V/s 17.90 Reported Full Year EPS is 73.11 V/s 39.43 A look at Assets & Liabilities: Share Capital is 52.73 Cr v/s 52.73 Cr. Share Capital is 16.62 Cr v/s 16.62 Cr. R&S up 20.2% to 795.98 Cr from 662.00 Cr. R&S up 25.1% to 556.84 Cr from 445.12 Cr. Inventories up 32.8% to 241.72 Cr from 182.04 Cr Inventories up 26.1% to 127.02 Cr from 100.73 Cr Sundry Debtors up 25.3% to 271.11 Cr from 216.29 Cr. Sundry Debtors up 20.7% to 131.45 Cr from 108.91 Cr. Cash & Bank balances DOWN 26.7% to 211.91 cr from 289.26 Cr. Cash & Bank balances UPPP 66.4% to 288.01 Cr from 173.07 Cr. Loans & Advances UPPP 72% to 233.85 Cr from 135.99 Cr. Loans & Advances DOWN 1.4% to 75.84 Cr from 76.92 Cr. - ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |
Posted By: commnman
Date Posted: 21/Apr/2011 at 7:52pm
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Sorry to hijack this SKF thread with its rival FAG!
I could not hold back as FAG is out with super numbers. Q1 results out (the company follows DEC-ending FY) Total Income up 30.5% to 309.72 Cr from 237.4 Cr. EBIDTA up 75% to 63.38 Cr from 36.22 Cr. Net Profit up 90.8% to 42.88 Cr from 22.47 Cr. EBIDTA margin is 20.46% V/s 15.26% (MQ-10) and 19.62% (DQ-10) NET Pr margin is 13.84% V/s 9.47% (MQ-10) and 13.64% (DQ-10) Cost of goods sold as a %ge to Income is 55.98% V/s 61.63% (MQ-10) and 55.25% (DQ-10) Purchase of traded goods DOWN 8.2% to 74.72 Cr from 81.39 Cr year ago. That helps in to reduce material costs. And that explains 75% increase in EBIDTA. Then add Other income which is 6.29 Cr v/s 2.89 Cr and Tax Rate which is 33% v/s 33.83%. And you have almost doubling of net profits! Reported EPS is 25.8 v/s 13.52. - ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |
Posted By: sainivas
Date Posted: 23/Apr/2011 at 9:59am
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Commmn, thanks for your analysis of FAG
You have commented on this discussion being under SKF... there is a link though......there is no reason for the huge PE difference between FAG and SKF. ------------- Agey Dekho |
Posted By: sainivas
Date Posted: 25/Apr/2011 at 12:37pm
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The PE difference between FAG and SKF has got narrowed in the past two days!!
However FAG is still cheap at 11 times CY 11 earnings..... ------------- Agey Dekho |
Posted By: Hrishi
Date Posted: 04/May/2011 at 1:08am
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SKF Posted the results, Has any one Analyzed?
40% increase in profit and 25% increase in sales.. |
Posted By: commnman
Date Posted: 22/Jul/2011 at 6:05pm
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March of the FAG continues...
(Note Comparisons for Six-month ended June-11) Where first line for SKF and Second line for FAG) Hy/JUN-11 v/s Hy/JUN-10: Total Income up 21.8% to 1234.29 Cr from 1012.99 Cr. Total Income up 23.3% to- 628.99 Cr from 510 Cr. EBIDTA up 15.7% to 169.08 Cr from 146.17 Cr. EBIDTA up 45.2% to 128.29 Cr from 88.37 Cr. Net Profit up 22.2% to 112.44 Cr from 92.02 Cr. Net Profit up 55.6% to 87.6 Cr from 56.3 Cr. EBIDTA margin is 13.7% V/s 14.4% EBIDTA margin is 20.4% V/s 17.3% NET Pr margin is 9.11% V/s 9.1% NET Pr margin is 13.9% V/s 11% Raw material costs as a %ge to Income is 64.2% V/s 64.9% Raw material costs as a %ge to Income is 55.9% V/s 60.5% Employee plus Other expenses to sales is 22.1% v/s 20.6% Employee plus Other expenses to sales is 23.8% v/s 22.2% Tax Rate is 32.5% v/s 33.6% Tax Rate is 32.8% v/s 33.5% EPS 21.4 v/s 17.5 EPS 52.7 v/s 33.9 - ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |
Posted By: Hrishi
Date Posted: 22/Jul/2011 at 6:55pm
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And after the Fag's performance today (7% Increase), difference in P/E got reduced. Fag at 17 and SKF at 19.
(P/E from rediff) Will it be another Infy / TCS story in terms of valuations? Do you see Fag taking a lead over SKF in terms of valuations in near term ? |
Posted By: photophobic111
Date Posted: 22/Jul/2011 at 7:15pm
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Stupid question - Which co is being referred as FAG here?
------------- Doing best is the essence and improving your best is the key to everything.... |
Posted By: commnman
Date Posted: 22/Jul/2011 at 7:15pm
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Hrishi ji,
If you compare Sales, FAG still has a lot to catch up. Then, SKF balance sheet size is 965 Cr compared to 663 of FAG. I am still learning and not expert enough to comment on valuations etc 
Also, there are other companies in this sector which are doing equally well viz Timken, NRB etc. ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |
Posted By: Hrishi
Date Posted: 22/Jul/2011 at 8:06pm
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Sir, I am no expert either and TED is helping me a lot to learn.
Question was on valuations difference of FAG and SKF. As market tends to give higher multiple for higher growth story, so will FAG becomes the favor of market and can it get higher multiple than SKF? Actually SKF is 15% of my portfolio and has gained more than 100% from my average price. So now thinking of diverting a part of it to FAG. (But 7% increase in a day.. Hmm... Again decision paralysis...now or wait for correction )
Over a longer term both have given similar returns. Let both fight each other in market, and we be the winner by holding both.
I am thinking of similar for TCS (i own this) / Infy Exide / Amara Raja (i own this) (there is already a TTK / Hawkins love story going on in TED, i missed both  )
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Posted By: photophobic111
Date Posted: 22/Jul/2011 at 8:35pm
Which company is FAG? can u post full name? is it FAG bearings?
------------- Doing best is the essence and improving your best is the key to everything.... |
Posted By: Hrishi
Date Posted: 22/Jul/2011 at 8:39pm
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yes
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Posted By: Ravenrage
Date Posted: 22/Jul/2011 at 8:40pm
Fag Bearings India Limited . It was incorporated as Precision Bearings in 1962 . In 1986, the name was changed to FAG Precision Bearings Limited and finally to FAG Bearings Ltd. in 1999.
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Posted By: commnman
Date Posted: 01/Nov/2011 at 7:23pm
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Q3/Cy-11 Results out...
Total Income up 14.1% to 605.87 Cr from 530.94 Cr. EBIDTA up 33.1% to 82.32 Cr from 61.87 Cr. Net Profit up 35.6% to 55.69 Cr from 41.07 Cr. EBIDTA margin is 13.6% V/s 12.8% (JQ-11) and 11.7% (SQ-10) NET Pr margin is 9.2% V/s 8.6% (JQ-11) and 7.7% (SQ-10) Total Raw material costs as a %ge to Income is 64.3% V/s 64.8% (JQ-11) and 64.9% (SQ-10) Employee costs to Income is 6.4% V/s 6.5% (JQ-11) and 7.1% (SQ-10) Other expenses to Income is 15.7% V/s 15.9% (JQ-11) and 16.3% (SQ-10) Note: Interest Income up 69% to 9.26 Cr from 5.48 Cr which somewhat helped Net profits. 9M/Cy-11 v/s 9M/Cy-10: Total Income up 19.1% to 1839.38 Cr from 1543.93 Cr. EBIDTA up 20.5% to 250.62 Cr from 208.05 Cr. Net Pr up 26.3% to 168.13 Cr from 133.1 Cr. Interest Income up 85.4% to 25.64 Cr from 13.83 Cr. Tax Rate 32.5% V/s 33.5% Reported Nine-month EPS is 31.9 V/s 25.2 - ------------- main toh aam aadmi hun... jo sunta hoon wohi sach maanta hoon |