Hold SKF India; target of Rs 1845: ICICI Direct
ICICI Direct’s research report on SKF India
SKF India (SKF) reported weak Q4FY19 results, below our estimates. Revenues grew 6.4% YoY at Rs 748.4 crore. EBITDA margins came in at 14.8% vs. 15.1% YoY. Lower margins were on account of lower gross margins (-190 bps YoY). Other expenses de-grew 2.8% YoY. Accordingly, absolute EBITDA increased 4.6% YoY. PAT came in at Rs 82.2 crore, up 14.9% YoY primarily due to higher other income (forex income of Rs 6.7 crore) and lower depreciation expenses, which grew 55% and 0.3% YoY, respectively.
We value the company at 24x P/E on FY21E EPS to arrive at a target price of Rs 1845/share. We have a HOLD recommendation on SKF.
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