SKP Bearing — Q3 FY26 earnings call

Call held 19 Feb 2026

Management summary

SKP Bearing reported strong revenue growth in Q3 FY26, with standalone revenue up 41% and consolidated revenue up 38.9%. While the India operations showed margin improvement and capacity expansion, the France subsidiary continued to incur losses of INR 5.81 crores, primarily due to one-time employee costs and slower-than-expected customer revalidation. Management remains optimistic about the France turnaround, targeting INR 100 crores revenue and breakeven in calendar year '26, alongside continued domestic expansion and export growth.

Highlights

  • Standalone revenue grew substantially by 41% QoQ in Q3 FY26.

  • Consolidated revenue (India and France) saw a substantial increase of 38.9% QoQ.

  • EBITDA margins for the standalone business improved slightly to 9.5%.

  • Roller plant expansion is in progress, with capacity added and utilization started, targeting 200 tons per month.

  • Export-oriented focus has increased, contributing to revenue, with exports now at 5% of overall revenue, targeting a further 1-2% increase this quarter.

  • France plant is making good progress, with customer ramp-up and strategy for operational alignment underway, targeting INR 100 crores revenue this year.

Concerns

  • France subsidiary reported a loss of INR 5.81 crores in Q3 FY26, attributed to one-time economic dismissal costs and ongoing fixed costs.

  • Standalone gross margins dropped significantly from 70%+ in Q1/Q2 to 58% in Q3, explained by 'product shifts' or 'low value additions'.

  • Ball plant utilization is not going as planned due to delays in QC implementation and customer revalidation processes, which are government-driven.

  • Challenges in the European market due to high compliance costs and competition from 'very cheap imports' make it difficult to reach previous revenue levels (16 million euros) quickly.

Key financials

3 periods

Headline

  • Standalone Revenue Growth
    41%
    QoQ +41%
  • Consolidated Revenue Growth
    38.9%
    QoQ +38.9%
  • Standalone EBITDA Margin
    9.5%
  • France Subsidiary Loss
    ₹5.81 Cr

Q1/Q2

  • Standalone Gross Margin
    70%

Q3

  • Standalone Gross Margin
    58%

What they filed

Q1 FY27: revenue down 0.0%, net profit down 89.5% against the same quarter last year.

₹ Cr · quarterly
Line itemQ1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue22 18 25 38 22 −0%
EBITDA3 5 1 1 2 −6%
Net profit0 3 -1 -1 0 −89%
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.

Order book

medium confidence

Composition

  • Export (geography) 5%
Management states they have a 'confirmed order book, full requirement' for France and 'very large' order books overall, but does not provide specific quantified values for the total order book or new order inflows.

Source: Q&A

Capital allocation

high confidence
  • Capex Capex disclosed
    • Expansion in roller plant capacity
    • Capacity addition for ball plant
    In the current plant with space constraint removed since the ball plant has shifted, we have started expansion in the roller plant itself. Some of the capacity has been added and utilization of the same has also been started. And further addition is on the way, which is in line with our target of 200 tons per month.
  • M&A Valette & Gaurand Industries (now SKP France) Acquisition · Integrated

    To gain a foothold in the European continent, add customers in multiple continents, acquire new technology not available in India, reduce costs through raw material/tooling export from India, and present SKP as a global manufacturer.

    The subsidiary made a loss of INR 5.81 crores in Q3 FY26, partly due to economic dismissal costs. Revenue dropped to 25% of pre-acquisition levels initially due to customer revalidation.

    We had taken over a 95-year-old French company, Valette & Gaurand Industries. And now it has become SKP France. So there we are having a vast, diverse portfolio. And even the customer segment over there is quite vast. So in India, if you see, we have more of automotives and technical. There we have more of pharma, cosmetics and all other industries. ... that subsidiary made a loss of INR5.81 cr. ... revenue was 8 million euros to 8.5 million euros in '23. ... post acquisition, our revenue was just 25%, something like that, or even less probably.

Guidance & targets

Capacity

  • Roller plant capacity Capacity · ongoing · High confidence 200 tons per month
    And further addition is on the way, which is in line with our target of 200 tons per month.

    — Shripada Patil

Certification

  • Automotive IATF certificate eligibility Certification · next financial year · High confidence Eligible next financial year
    Also in this financial year, ISO is achievable after 3 months. So that we have started the initiative and next year we will be eligible for automotive IATF certificate.

    — Shripada Patil

Revenue

  • France plant revenue Revenue · this financial year · High confidence INR 100 crores
    And one of the key wins is that we are looking, our target of INR100 cr. is on and we are looking forward to fulfilling it this year.

    — Shripada Patil

Profitability

  • France plant profitability Profitability · calendar year '26 · High confidence Green (breakeven/profitable)
    That's why I already explained that this is our focus in '26 calendar year we will be green. That's very clear.

    — Shrinand Palshikar

Exports

  • Export share of revenue Exports · this quarter · Medium confidence Increase by 1-2%

    From 5% today

    And regarding the order book percentage, we can say that the percentage of export, as we've mentioned in the call, it is 5% of the overall revenue in the export. So we're expecting that 5% to increase further by 1%, 2% this quarter.

    — Shripada Patil

Margins

  • Standalone gross margins Margins · ongoing · High confidence Sustained
    This is more or less going to be sustained. More or less, this is sustainable. There is no issue for that. Because our manufacturing activities, our cost, everything is the same. So there is no change going to be there.

    — Shrinand Palshikar

What to watch in Q4 FY26

France plant profitability (turn green)

calendar year '26
Current Loss of INR 5.81 crores in Q3 FY26
Target Breakeven/Profitable

Why it matters

Crucial for the overall profitability and success of the strategic European acquisition.

That's why I already explained that this is our focus in '26 calendar year we will be green. That's very clear.

Risks & concerns

  • Delay in QC implementation and customer revalidation for ball plant

    medium

    Government-driven QC implementation delays and customer revalidation processes are slowing down the utilization ramp-up of Plant 3 (ball plant).

    Management acknowledged

  • Slower-than-expected turnaround and customer re-engagement for France subsidiary

    medium

    Post-acquisition, many European customers required extensive legal and quality audits, leading to revenue fluctuations and initial losses, making the turnaround longer than anticipated.

    Management acknowledged

  • Competition from cheap imports in the European market

    medium

    High compliance costs in Europe make it challenging to compete with very cheap imports, hindering the France plant's ability to quickly regain previous high revenue levels.

    Management acknowledged

  • Gross margin pressure in standalone business due to product mix

    medium

    Standalone gross margins dropped from 70%+ to 58% in Q3, attributed by management to 'product shifts' or 'low value additions'.

    Analyst acknowledged

Q&A highlights

4 direct
Ball plant (Plant 3) traction and new customer onboarding Partial
This process is on correct. For some, the approval has come. For some, the quality audits, the processes are going on. So we are at different stages for each different client. ... So that is why the utilization of plant three is not going the way we planned it to. Because we have already done all commercial settlement, everything. Only now question of utilization.

Reveals that despite commercial settlements, utilization is delayed due to customer revalidation and government-driven QC implementation, impacting revenue ramp-up.

Asked by Pankit Shah

France subsidiary's demand and sales fluctuations in Q2/Q3 FY26 Direct
It's fluctuations. Many, many, many -- not one factor, many factors were there. So because of that, the fluctuations were there. Last year, we had many customers with smaller volumes. ... Now all these customers have now allocated capacities, allocated volumes to us. So there is a big now turnaround. So these situations will change in time to come.

Explains the reasons for the dip in France sales post-acquisition, attributing it to customer revalidation and smaller initial volumes, but indicates a positive turnaround is expected.

Asked by Pankit Shah

Reasons for employee reduction in France (52 to 31) and the INR 5.81 cr loss Direct
Simple. Because we didn't -- the revenue, when we took over, it was around 8 million euros. We didn't have the customers return. So the customers, some of the customers are taking more time than expected. So it's very important that you need to balance your revenue versus your employee strength. Because the employee cost is very high in Europe. ... Usually, just now also I said economic dismissal. So economic dismissal is a cost. It's a cost like -- it's a cost of when you some employees are reduced, you need to pay them. So this is a big cost. And these are one-time costs.

Clarifies that employee reduction was a strategic move to balance costs with lower initial revenue in Europe, and the Q3 loss includes one-time economic dismissal costs, providing context for the subsidiary's financial performance.

Asked by Vimal Modi

Ability to reach 16 million euros revenue level in France within two years Partial
No, no, no. It's not that easy. It's not that easy. See you have global challenges. Now you have all these customers, majority of that is lost to very cheap imports. When I say cheap imports, manufacturing in a country where high compliance is there, high compliance cost is there. You still need to reach a very high of productivity and meet the cost requirement. ... I am not sure about the timeline, but our focus is that.

Management acknowledges the difficulty in quickly regaining the previous high revenue levels in France due to global competition and high European costs, indicating a longer path to full recovery.

Asked by Rudraksh Raheja

Significant drop in standalone gross margins from 70%+ to 58% in Q3 Partial
See, it could be little product shifts here or there. But there is nothing which is model change or nothing like that. Everything is okay. Everything is the same way it is. It could be because of some product or something. It could be a little shift. ... Yeah, it could be some item which could be of low value additions we could have added. Because of that there could be a little shift. That is why the revenue increase is higher.

Highlights a material decline in gross margins for the core business, with management attributing it to product mix changes rather than structural issues, requiring further monitoring.

Asked by Rudraksh Raheja

Breakeven status of the ball plant at 23% utilization Direct
That's okay. Breakeven is not a problem.

Provides reassurance that despite low utilization (23%) due to ramp-up challenges, the ball plant is not a drag on profitability, suggesting fixed costs are manageable.

Asked by Rudraksh Raheja

Purpose of France acquisition: technology vs. customers Direct
One thought process was the business, overall business in European continent. So you need to have a foothold in European continent, number one. ... Number two, you need to add the customers which are in multiple continents with these customers. ... Third, the technology. The technology which is available over there, many technology which is not available in India.

Clarifies the multi-faceted strategic rationale behind the France acquisition, encompassing market access, customer base expansion, and technology transfer, rather than a single objective.

Asked by Amresh Kumar

2 min read 5 chapters

Detailed narrative

Q3 FY26 Financial Performance Overview

SKP Bearing Industries Limited reported a robust Q3 FY26, with standalone revenue increasing substantially by 41% quarter-on-quarter. Consolidated revenue, including India and France entities, also saw a significant rise of 38.9%. Standalone EBITDA margins improved slightly to 9.5%. However, the France subsidiary recorded a loss of INR 5.81 crores during the quarter, impacting overall consolidated profitability. The standalone gross margins experienced a notable decline from over 70% in Q1/Q2 to 58% in Q3, attributed to product mix shifts.

France Acquisition and Turnaround Strategy

The acquisition of Valette & Gaurand Industries (now SKP France) in February 2024 was a strategic move to establish a European foothold, expand customer base, and acquire advanced technology. Post-acquisition, the French entity faced challenges, including customer revalidation processes and high European operating costs, leading to an initial revenue drop to 25% of its 2023 levels (8 million euros). Management has reduced employee count from 52 to 31 to balance costs and is actively re-engaging customers. The target for the France plant is to achieve INR 100 crores revenue this financial year and turn profitable ('green') in calendar year 2026.

Domestic Operations: Roller and Ball Plants

In domestic operations, the roller plant is undergoing expansion, with new capacity added and utilization commenced, aiming for a target of 200 tons per month. The ball plant (Plant 3) has its capacity fully installed, but utilization ramp-up is slower than planned. This delay is primarily due to government-driven Quality Control Order (QCO) implementation and prolonged customer revalidation processes. Despite low utilization, management asserts that the ball plant is not a breakeven concern. The company is also pursuing automotive IATF certification, expected by the next financial year.

International Strategy and Export Focus

SKP Bearing's international strategy involves leveraging its global presence to target multinational clients with plants across continents. Exports currently constitute 5% of the overall revenue, with a target to increase this by an additional 1-2% in the current quarter. The company aims to utilize its Indian manufacturing proficiency, including raw material processing and tooling, to support and reduce costs for its French operations and international clients. Management emphasizes the long-term potential of its export-oriented approach and the benefits of the Free Trade Agreement between India and Europe.

Customer Portfolio Diversification and Engagement

The company has undertaken initiatives to balance its customer portfolio, reducing reliance on any single industry. This strategy is yielding positive results, with increased diversification and revenue growth. For the France operations, customer engagement is a key focus, with ongoing discussions for product validation and new generation requirements. Management is confident in securing larger volumes from these customers once revalidation processes are complete and trust is fully established, moving from small initial orders to larger, sustained business.

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