Timken India Limited — Q1 FY26 earnings call

Call held 1 Aug 2025

Management summary

Timken India delivered its strongest-ever Q1 revenue performance despite seasonal softness following a record Q4. The company is aggressively expanding capacity with the capitalization of new lines at Bharuch and planned investments in Jamshedpur. While management remains cautious about global macroeconomic uncertainties and potential US tariffs, they are focused on operational efficiency and diversifying into non-bearing portfolios like plain bearings.

Highlights

  • Revenue from operations reached ₹808.8 crores, a 3.2% increase YoY, marking the company's best-ever first quarter.

  • PBT stood at ₹130.4 crores with a healthy margin of 16.1%, compared to 16.6% in the previous year's Q1.

  • Rail segment contributed ₹196.5 crores (24% of revenue), though it saw a seasonal decline from the record Q4 FY25.

  • Exports revenue was ₹164 crores, representing 20% of the total revenue mix.

  • Capitalized the first Cylindrical Roller Bearing (CRB) line at the Bharuch plant in late June; commercial production and invoicing commenced in July.

  • Management guided for a 45-50% exit utilization for the new Bharuch facility by the end of FY26.

  • Announced immediate expansion capex of ₹150+ crores, including ₹120 crores for rail expansion in Jamshedpur and ₹35 crores for plain bearings in Bharuch.

Concerns

  • US Macroeconomic Softness

Key financials

  1. Revenue ₹808.8 Cr +3.2%YoY
  2. PBT ₹130.4 Cr 0%YoY
  3. PBT Margin 16.1%
  4. EBITDA Margin 18%

What they filed

Q1 FY27: revenue up 14.8%, net profit up 10.6% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue753 671 940 809 773 +3%764 +14%1,073 +14%929 +15%
EBITDA133 107 210 142 138 +4%96 −10%235 +12%172 +21%
Net profit90 74 187 104 89 −1%50 −32%155 −17%115 +11%
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

Share of Revenue
₹804.5 Cr Total
  • Rail ₹196.5 Cr 24.4%
  • Exports ₹164 Cr 20.4%
  • Mobile ₹156 Cr 19.4%
  • Distribution ₹146 Cr 18.1%
  • Process ₹142 Cr 17.7%

Guidance & targets

Capacity

  • New Plant Utilization Capacity · by end of FY26 · High confidence 45-50%

    Previously 45% → 45-50%

    I think more or less, we will be there. We would be staying course... we should be able to deliver almost same. A couple of percentage here or there.

    — Sanjay Koul, Chairman and Managing Director

Capex

  • Immediate Expansion Capex Capex · between now and next year · High confidence ₹150+ crores
    So for the rail expansion, which will happen that is INR120 crores and then the first plain bearing is roughly INR35-odd crores. So that is on this immediate expansion capex is around INR150-plus crores that is going to happen between now and next year.

    — Sanjay Koul, Chairman and Managing Director

Revenue

  • Asset Turnover on Rail Expansion Revenue · FY26 · Medium confidence >2x
    And on asset terms, more than two for every dollar invested, that is the endeavor.

    — Sanjay Koul, Chairman and Managing Director

  • Rail and Process Segment Growth Revenue · FY26 · Medium confidence High single digits
    But both rail and process would be high single.

    — Sanjay Koul, Chairman and Managing Director

Risks & concerns

  • US Macroeconomic Softness

    high

    Management is more worried about the US economy bottoming out than the specific tariff levels.

    Management acknowledged

  • Import Tariffs (US)

    medium

    Potential 10-25% tariffs on Indian exports to the US could act as a 'speed breaker'.

    Both acknowledged

  • Weakness in Mining and Steel

    medium

    Mining is described as 'weak' and steelmaking as 'sluggish' due to lower demand and melt rates.

    Management acknowledged

Areas of evasion (1)

  • Specific order book numbers for CRB/SRB were not shared for competitive reasons.

Q&A highlights

2 direct
Impact of US Tariffs and Class 8 Truck Weakness Direct
I don’t think it is a showstopper, but it is certainly a speed breaker a little bit here and there. So we will risk mitigate that.

Clarifies that while US tariffs are a concern, the company is derisking by targeting other global markets like Australia, South Africa, and Europe.

Asked by Mukesh Saraf, Avendus Spark

EBITDA Margin Recovery to 20%+ Partial
When you have the volumes, your leverage is better. When your leverage is better, your cost is better... In the game of manufacturing bearings, Volume leverage is a big play.

Management indicates that returning to historical 20%+ margins is dependent on volume recovery and operating leverage rather than immediate pricing power.

Asked by Ankur, HDFC Life

Export Incentive Discrepancy Direct
No. We don't have any export -- 36 million it is. Actually, it is for the quarter is 36 million, which is about INR3.6 crore. Wish we had INR90 crores, I would have been happy.

Corrects a significant analyst misconception regarding the quantum of export incentives, preventing inflated earnings expectations.

Asked by Vimal Jamnadas Gohil, Alchemy Capital Management

2 min read 5 chapters

Detailed narrative

Record Q1 Revenue Amid Seasonal Headwinds

Timken India reported its best-ever first quarter with revenue of ₹808.8 crores, a 3.2% YoY increase. This performance was achieved despite the typical seasonal dip following Q4, which historically is the company's strongest quarter. PBT remained stable at ₹130.4 crores, supported by cost control efforts that mitigated some volume softness and cost fluctuations.

Bharuch Plant Expansion Enters Commercial Phase

The company successfully capitalized its first Cylindrical Roller Bearing (CRB) line at the Bharuch plant in the last week of June 2025. Commercial production has commenced, and invoicing began in July, primarily for export markets. Management maintains its target of reaching 45-50% exit utilization for this new facility by the end of the current financial year.

Rail Segment Dynamics and Future Growth

The rail segment contributed ₹196.5 crores to the top line, representing 24% of total revenue. While this was a sequential drop from the record ₹303 crores in Q4 FY25, management remains optimistic about long-term growth driven by Indian Railways' commitment to Vande Bharat platforms and Dedicated Freight Corridors (DFC). Growth in rail and process segments is expected to be in the high single digits for FY26.

Navigating Global Trade and Tariff Risks

Management addressed concerns regarding potential US tariffs and weakness in the North American Class 8 truck industry. They clarified that their target export markets for CRB and SRB products are diversified across Australia, South Africa, Europe, and ASEAN. While the US remains a key market, the company is actively derisking and views potential tariffs as a 'speed breaker' rather than a 'showstopper'.

Strategic Capex and Product Diversification

Timken is investing ₹150+ crores in immediate expansion, including ₹120 crores for rail capacity in Jamshedpur and ₹35 crores for a new plain bearing line in Bharuch. The plain bearing project represents a strategic move into the parent company's non-bearing portfolio, with production expected to start next year. Management expects an asset turnover of more than 2x for the Jamshedpur investment.

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