ICICI Direct recommended hold rating on Timken India with a target price of Rs 614 in its research report dated November 30, 2016.
ICICI Direct's research report on Timken India
The company is executing two capital expansion programmes, for the railway bearings segment (Rs 124.7 crore) and for the tapered roller bearing segment (Rs 64.3 crore). As per the management, both expansion programmes are moving as per the schedule. We now roll the valuations of the company to FY19E. Timken has historically traded at premium valuations of over 25x forward earnings due its niche expertise and strong parentage. With moderate capex and strong balance sheet, we believe TIL is well placed to capture the upcoming opportunity in the railways, DFC, renewable and auto segment in addition to export led growth. Thus, we value the company at 29x FY19E EPS of Rs 21.2 and retain our target price of Rs 614. We have a HOLD rating on the stock.
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