SKF India — Q1 FY26 earnings call

Call held 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

  • 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

  • Capacity Constraints

Key financials

  1. Revenue ₹4,919.9 Cr +7.6%YoY
  2. Profit Before Tax ₹763.1 Cr +3.7%YoY
  3. EPS ₹111.4 +2.5%YoY
  4. Revenue 5-Year CAGR 16.4%
  5. Market Share 22.5%

What they filed

Q1 FY27: revenue up 27.3%, net profit down 47.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue399 559 493 462 496 +24%577 +3%595 +21%588 +27%
EBITDA63 106 123 74 58 −8%82 −23%33 −73%88 +19%
Net profit94 110 203 119 106 +13%62 −44%-20 −110%62 −48%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

SegmentProduction LocalisationManpower Allocation (Post-Demerger)
Automotive95%57.5%
Industrial40%42.5%

Guidance & targets

Other

  • Demerger Listing Timeline Other · by Q4 2025 · High confidence Q4 2025
    our journey to transform into two fit-for-purpose companies is well on track and if everything goes according to plan we should be looking at listing and trading by Q4 of 2025, calendar year 2025.

    — Mukund Vasudevan, Managing Director

Capex

  • Annual Capex Investment Capex · Next 2 years · High confidence ₹250 crores

    Previously ₹130-150 crores → ₹250 crores

    we expect that to be in the range of around 250 crores to go up to around 250 crores on an annual basis, and over a period of next five years we expect the investments to be in the range of around 1,200 crores.

    — Ashish Saraf, CFO

Sustainability

  • Manufacturing Decarbonization Sustainability · by 2030 · High confidence 100%
    on track to fully decarbonize our manufacturing by 2030 and achieve net zero emission by 2050.

    — Gopal Subramanyam, Chairperson

Market Share

  • Bearing Space Market Share Market Share · Ongoing · Medium confidence 20-25%
    we are the leader with a market share of give or take a few, around 20% to 25% in the bearing space.

    — Mukund Vasudevan, Managing Director

Risks & concerns

  • Capacity Constraints

    high

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

    Management acknowledged

  • Inflationary Headwinds

    medium

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

    Management acknowledged

  • Supply Chain Disruptions

    medium

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

    Management acknowledged

Areas of evasion (1)

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

Q&A highlights

3 direct
Muted Growth and Profitability Direct
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

Demerger Share Allocation and Listing Direct
this demerger is happening on one is to one share allocation, which means that if you have one shares in SKF India Limited, once the demerger concludes, you will get one share of equal value in the new entity as well.

Clarifies the corporate action mechanics for shareholders, confirming no dilution and a simple 1:1 split.

Asked by Hiranand Kotwani

Capex Roadmap and Capacity Constraints Direct
In both in Pune and Bangalore factory, we are short of capacity to meet the existing demand. So, we will be setting up more capacity... we expect that to be in the range of around 250 crores [annually].

Identifies capacity as a current bottleneck and justifies the near-doubling of annual capex to drive future growth.

Asked by Jahangir Batiwala

2 min read 5 chapters

Detailed narrative

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.

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.

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.

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.

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.

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