While Schaeffler has fallen by 17%, Timken and SKF’s declines stand at 20% and 22%, respectively. This is despite the headline index Nifty gaining over 10% during this period.
The bearing companies’ recent stock price corrections was on account of weakness in the export market and temporary slowdown in select domestic industrial segments due to the looming election, Kotak said as it sees the medium-term growth drivers remaining in place with the railway (Timken and SKF), export (Timken and Schaeffler) and aftermarket segments (SKF and Schaeffler) driving growth.
These stocks were trading in the red amid weakness in the overall market, falling up to 3%.
Kotak expects recovery in exports, domestic railways and aftermarket segments from 2HCY24E. “We remain constructive on medium term growth prospects, arising from the e-mobility segment for Schaeffler and Timken’s entry into the roller bearing segment. Recovery in export will also drive margin expansion for Schaeffler and Timken, in our view,” the brokerage said in a note.
Schaeffler India: Target: Rs 3,000
Kotak increased its CY2025-26E EPS by 1-2% on higher revenue growth assumptions. Government’s focus on enhancing railway infrastructure, coupled with constant addition of new products and expansion of distribution reach, to drive its strong growth. In its view, export segment demand is expected to recover from 2HCY24E, which will support profitability.
Timken: Target: Rs 2,800
Kotak fine-tuned its FY2025-26 EPS estimates expect demand trends to improve from 2QFY25E, especially driven by the railways and off-highway segments. It expects the company to deliver a strong EPS CAGR of 16% over FY2023-27E.
SKF India: Target: Rs 4,400
Kotak has maintained its FY2024-25E EPS estimates and increased our FY2026E EPS estimates by 3%. It has revised its fair value of Rs 4,400 from Rs 4,150 mainly on roll-over to June 2026E, implying a multiple of 30X FY2026E EPS. “We are ascribing lower multiples to SKF as compared with Schaeffler and Timken, given the lack of focus on the export segment and its localization mix lagging peers,” this brokerage said.
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