Timken India Limited — Q3 FY25 earnings call

Call held 10 Feb 2025

Management summary

Timken India delivered a record Q3 revenue performance driven by moderate domestic demand and an uptick in intercompany exports. While margins faced pressure from an unfavorable product mix, the company successfully offset this through cost leverage. The primary focus remains the imminent commissioning of the ₹600 crore Bharuch facility, which will introduce localized production of Spherical and Cylindrical Roller Bearings (SRB/CRB) for both domestic and global markets.

Highlights

  • Reported best-ever December quarter revenue of ₹671.4 crores, representing a 9.7% YoY growth.

  • PBT margins stood at 14.6%, slightly down from 14.9% in the prior year due to unfavorable product mix.

  • Bharuch greenfield project (₹600 crore capex) is nearing completion with production expected to start imminently.

  • Year-to-Date (YTD) revenue reached ₹2,208 crores for the first nine months of FY25.

  • Export revenue for the quarter was ₹152 crores, contributing 23% to the total revenue mix.

  • Rail segment revenue was ₹116 crores (17% of mix), showing quarter-on-quarter improvement.

  • Management targets 50-60% capacity utilization for the new Bharuch plant by the end of FY26.

  • Maintained a debt-free balance sheet with strong cash reserves to fund strategic investments.

Key financials

  1. Revenue ₹671.4 Cr +9.7%YoY
  2. PBT Margin 14.6%
  3. YTD Revenue ₹2,208 Cr
  4. Export Revenue ₹152 Cr +22.5%QoQ

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
₹666 Cr Total
  • Exports (Intercompany) ₹152 Cr 22.8%
  • Mobile Others ₹139 Cr 20.9%
  • Process (Stationary) ₹132 Cr 19.8%
  • Distribution ₹127 Cr 19.1%
  • Rail ₹116 Cr 17.4%

Guidance & targets

Capacity

  • Bharuch Plant Capacity Utilization Capacity · by March 2026 · High confidence 50-60%
    the intent is that we should at least fill up the plant in the first year to 50% to 60% of the capacity.

    — Sanjay Koul, Chairman and Managing Director

  • Bharuch Plant Capacity Utilization Capacity · by end of 3 years · Medium confidence 85%
    85% by the end of 3 years would be a great achievement for us, and we are known to hit the targets.

    — Sanjay Koul, Chairman and Managing Director

Revenue

  • Export Revenue Growth Revenue · FY26 · Medium confidence Better than FY25
    My personal feel is that the '25-'26 exports would be better than '24-'25.

    — Sanjay Koul, Chairman and Managing Director

Capex

  • Bharuch Greenfield Project Investment Capex · FY25 · High confidence ₹600 crores
    Obviously, we are setting up this new plant, INR600 crore capex

    — Sanjay Koul, Chairman and Managing Director

Risks & concerns

  • Unfavorable Product Mix

    medium

    A resilient margin performance was offset by a very unfavorable product mix during the quarter.

    Management acknowledged

  • Global Export Headwinds

    medium

    Struggling European markets and potential US tariff changes create uncertainty, though management sees a 'slight uptick' recently.

    Both acknowledged

  • Heavy Truck Segment Slowdown

    low

    Management noted that the heavy truck segment is currently not 'great' and lacks immediate boom traction.

    Management acknowledged

Areas of evasion (2)

  • Specific revenue guidance for the Bharuch plant beyond utilization percentages.
  • Detailed margin impact of specific product mix shifts.

Q&A highlights

2 direct
Revenue potential of the new Bharuch plant Partial
So you'll have to give us another 3 months to understand this a little bit better as we unleash this product line out of the Bharuch plant... you can do this mathematics only 3 years down the line, but not immediately.

Analysts were pushing for a revenue target (e.g., 3x capex), but management refused to commit to a specific figure due to product mix uncertainty, focusing instead on utilization rates.

Asked by Shishir Saha

Impact of global tariffs and trade wars on exports Direct
India has given signals like bringing down the duty on the Harleys... if eventually there is going to be, say, 10-ish percent on Mexico, 10 extra percent on China, which in -- for the automotive world means a lot. So, it is good news for companies in India.

Management views potential US tariffs on China and Mexico as a competitive opportunity for Indian manufacturing to gain share in the global supply chain.

Asked by Sabyasachi Mukerji

Outlook for the Railway segment following budget allocations Direct
I think even if it is flattish, it is not a bad news at all... Slow and steady rail is better for the industry, and it is going that way.

Despite a flattish railway budget, management remains confident in steady demand driven by the need to phase out old rolling stock and increase track density.

Asked by Sabyasachi Mukerji

2 min read 5 chapters

Detailed narrative

Bharuch Greenfield Project: Imminent Commissioning

The ₹600 crore Bharuch greenfield project is in its final stages, with the building and utility areas complete and machines already installed. Management expects to start unboxing and initial production 'any day this week' once the HVAC system is connected. The facility will focus on Spherical Roller Bearings (SRB) and Cylindrical Roller Bearings (CRB), marking the first time these products are manufactured by Timken in India. Management has set a target of 50-60% capacity utilization by the end of FY26, scaling to 85% within three years.

Segmental Performance and Product Mix

Q3 FY25 revenue of ₹671.4 crores was driven by a diverse mix: Exports (23%), Mobile (21%), Process (20%), Distribution (19%), and Rail (17%). While revenue grew 9.7% YoY, PBT margins slightly contracted to 14.6% due to an unfavorable product mix. The Rail segment showed quarter-on-quarter improvement to ₹116 crores, and management remains optimistic about steady growth in this sector despite flattish government budget allocations, citing the ongoing need for rolling stock replacement.

Export Strategy Amid Global Uncertainty

Export revenue reached ₹152 crores in Q3, up from ₹124 crores in the previous quarter. Management acknowledges struggles in Europe and leadership changes in the US but remains cautiously optimistic, describing the outlook as 'flattish, uppish.' They believe India could benefit from potential US tariffs on China and Mexico, positioning the country as a reliable alternative in the global supply chain. The new Bharuch plant is expected to significantly enhance export capabilities by localizing high-demand bearing ranges.

Industrial Motion and Future Localization

Beyond bearings, Timken is exploring opportunities in 'Industrial Motion,' including lubrication systems, couplings, and chains. The parent company already has a presence in India through GGB (plain bearings), which generates approximately ₹30-50 crores in sales. Management is evaluating further localization of larger bearings (up to 48 inches) for the wind and cement markets, where they currently rely on imports. This strategy aims to replace imports and integrate Indian production into the global supply chain.

Wind Energy: A Stable Growth Driver

The Indian wind market is showing strong traction with major players like Adani and Suzlon installing 3MW and 5MW turbines. Management views the wind sector as 'stable or better,' noting that while the market can be 'dicey' globally, the local trend toward larger megawatt gearboxes and bearings is favorable for Timken's high-tech product portfolio. They are specifically targeting the export of gearboxes and localized larger-diameter bearings to serve this growing segment.

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