SKP Bearing

SKP Bearing reported a strong Q2 FY26 standalone performance with revenue from operations reaching ₹15.0 crores, marking a 10.29% QoQ increase from ₹13.6 crores in Q1 FY26. The company's EBITDA margin significantly improved to 40.9% in Q2 FY26. Profit After Tax (PAT) surged to ₹4.55 crores in Q2 FY26, representing a substantial 78.43% increase from ₹2.55 crores in the previous quarter. Profit Before Tax (PBT) also saw robust growth, rising to ₹6.9 crores from ₹4.1 crores QoQ. Consolidated results also indicated an improving trend, with a consolidated EBITDA margin of 25.4%.

The company is actively pursuing capacity expansion across its operations. Plant 3 has commenced operations, and debottlenecking efforts have successfully increased existing capacities. The ball plant's capacity has been expanded to 200 tons per month, although current utilization remains low at 40-50 tons per month. The roller plant, currently operating at approximately 100 tons, is also undergoing expansion to double its capacity to 200 tons. The overarching goal is to increase the combined capacity for both plants from 125-130 tons two years ago to 400 tons within the next one to two years.

The integration and turnaround of the French subsidiary, Valette & Gaurand Industries, acquired in 2024, are progressing. While the French operations are showing gradual improvements in margin and revenue, they experienced significant revenue fluctuation, dropping to ₹2.0 crores in Q2 FY26 from ₹8.0 crores in Q1 FY26. This volatility was attributed to global market situations and seasonal holidays in Europe. Management expressed confidence in a clear vision for 2025 and 2026, with a long-term strategy to restore the French entity's revenue to its historical operating level of €16 million.

SKP Bearing had an initial aspiration to achieve a ₹100 crore top line for FY26. However, with H1 FY26 revenue at approximately ₹40 crores, management acknowledged that reaching the ₹100 crore target would be challenging. Despite this, they anticipate a significantly better performance in the second half of the fiscal year. This optimism is supported by good visibility of orders for both Indian and French operations, indicating potential for strong revenue generation in the coming quarters^⏳.

The company's working capital is currently stretched due to higher working capital debt. Management clarified that their strategy of in-house product development and engineering leads to higher inventory levels. They emphasized that these higher inventory levels are a deliberate choice that contributes to the sustainability of their margins. The focus remains on providing long-term, sustainable solutions to customers and maintaining high-quality products at competitive value.

Management views the impending implementation of the Quality Control Order (QCO) as a significant positive for Indian manufacturers. They stated that SKP Bearing does not anticipate any negative impact from competition, including from Chinese manufacturers, due to its focus on quality and value. The QCO is expected to facilitate a shift of a substantial portion of the over ₹10,000 crore bearing and components market to Indian manufacturers, benefiting players of all sizes.