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    SKF India

    SKFINDIAGood
    Capital Goods·12 Aug 2025
    Management Summary

    SKF India delivered a steady performance in FY25 despite a 'muted' growth phase attributed to intentional portfolio pruning of unprofitable business. The company is undergoing a transformative demerger to sharpen focus on its Automotive and Industrial segments, with a clear roadmap for listing by late 2025. Management is pivoting toward aggressive capacity expansion and deeper localisation to sustain its long-term 16-17% CAGR trajectory.

    Highlights

    8

    • FY 2024-25 Revenue reached ₹4,919.9 crores, representing a 7.65% YoY growth.

    • Profit Before Tax (PBT) for FY25 stood at ₹763.1 crore, up 3.71% YoY.

    • Earnings Per Share (EPS) increased by 2.5% YoY to ₹111.4.

    • Announced a final dividend of ₹14.5 per equity share (145% on face value of ₹10).

    • Strategic demerger into two listed entities (Automotive and Industrial) is on track for listing by Q4 2025.

    • Localisation efforts reached 80% overall, with 95% in the automotive segment.

    • Planned Capex to increase significantly to ₹250 crores annually, totaling ₹1,200 crores over 5 years.

    • Maintained market leadership in bearings with a 20-25% market share.

    Concerns

    1

    • Capacity Constraints

    What Changed1

    vs Q4 FY26

    Q&A highlights8 → 3 (-5)

    Key financials

    Single quarter

    05 metrics
    1. 01Revenue₹4,919.9 Cr+7.6%YoY
    2. 02Profit Before Tax₹763.1 Cr+3.7%YoY
    3. 03EPS₹111.4+2.5%YoY
    4. 04Revenue 5-Year CAGR16.4%
    5. 05Market Share22.5%

    Segment breakdown

    Production LocalisationManpower Allocation (Post-Demerger)
    Automotive95%57.5%
    Industrial40%42.5%
    Heatmap· 2 shared metrics

    Guidance & targets

    4
    CategoryTargetPriority
    Other
    Demerger Listing Timeline
    Q4 2025
    		High
    Capex
    Annual Capex Investment
    ₹250 crores
    		High
    Sustainability
    Manufacturing Decarbonization
    100%
    		High
    Market Share
    Bearing Space Market Share
    20-25%
    		Medium

    Risks & concerns

    4
    RiskSeverity

    Capacity Constraints

    Management admitted being short of capacity in both Pune and Bangalore factories to meet existing demand. — Management acknowledged

    high

    Inflationary Headwinds

    Despite pricing discipline, inflationary pressures on raw materials and product mix continue to challenge margins. — Management acknowledged

    medium

    Supply Chain Disruptions

    Global and regional geopolitical challenges continue to disrupt supply chains, requiring higher operational agility. — Management acknowledged

    medium

    Areas of Evasion(1)

    • Specific details on international market share were generalized as being in the 'same range' as domestic.

    Q&A highlights

    3

    “This year in particular, 24-25, we did do a little bit of portfolio pruning, which basically means we stopped doing businesses with either customers who are unprofitable or we dropped products, which were unprofitable.”

    Explains why revenue growth (7.65%) lagged the historical 5-year CAGR (16.4%), signaling a focus on quality of earnings over volume.

    asked by Hiranand Kotwani

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Demerger: Unlocking the 'Power of Two'

    SKF India is in the final stages of a significant demerger, splitting its Automotive and Industrial businesses into two separate publicly listed entities. The move is designed to improve execution agility and customer alignment, with a 1:1 share allocation ratio for existing shareholders. Management expects the new entity to be listed and trading by Q4 2025, pending NCLT and other regulatory approvals. This restructuring aims to allow each business to pursue tailored growth strategies, particularly in e-mobility for automotive and vertical-specific solutions for industrial.

    02

    Capex Acceleration to Address Capacity Bottlenecks

    To counter current capacity shortages at its Pune and Bangalore facilities, SKF India is nearly doubling its annual capital expenditure from the historical ₹130-150 crore range to ₹250 crore. Over the next five years, the company plans a total investment of ₹1,200 crores. This investment is critical for meeting existing demand and supporting the company's goal of returning to its historical 16-17% growth trajectory after a period of 'portfolio pruning' in FY25.

    03

    Localisation and Innovation as Competitive Moats

    The company has achieved a high level of localisation, with 95% of automotive production now sourced locally. While industrial localisation currently stands at 40%, management is aggressively scaling this to improve supply chain resilience and price competitiveness. Innovation remains a core pillar, with new launches including sensorised hub units for electric 2-wheelers and 3-wheelers, and AI-powered maintenance platforms that transform SKF from a component provider to a holistic solution partner.

    04

    Sustainability and ESG Integration

    SKF India has made measurable progress in its 'Green' initiatives, reducing Scope 1 and 2 emissions by 28% YoY. Currently, 95% of the company's energy is derived from renewable sources. The company is on a strict timeline to fully decarbonize its manufacturing operations by 2030 and achieve net-zero emissions by 2050. Water stewardship is also a priority, with a 31% reduction in specific water consumption achieved in FY25.

    05

    Market Leadership and Competitive Landscape

    SKF continues to lead the Indian bearing market with a 20-25% share, competing primarily against Schaeffler and Timken. Exports currently account for 9-10% of total business, with key markets in Europe (Germany, France), Southeast Asia, and the Americas. Management believes that its combination of commercial excellence, pricing discipline, and digital aftermarket tools (like SKF on WhatsApp) will sustain its leadership position post-demerger.

    This is an AI-generated summary of a publicly available earnings call transcript. It is for informational purposes only and does not constitute investment advice, a recommendation, or an endorsement. inve.money is not a SEBI-registered investment advisor. Please consult a qualified financial advisor before making any investment decisions.