Buy SKF India; target Rs 671: Firstcall Research

“SKF Group is the leading global supplier of products, solutions and services within rolling bearings, seals, mechatronics, services and lubrication systems. SKF delivers critical components to flywheel systems and is now entering a project with Volvo Car Corporation and Volvo Group aimed at taking flywheels to mass production. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 43% over 2009 to 2012E. SKF and Bombardier Aerospace have entered into a long-term contract for SKF to supply over 40 different rod assemblies and titanium bearings for Bombardier's all new CSeries aircraft. The Company has posted profit of Rs 556.90 million for the quarter ended on Sep 30, 2011 as against Rs 410.70 million in the same quarter last year, an increase of 36%.”

“SKF India Ltd has posted profit of Rs 556.90 million for the quarter ended on Sep 30, 2011 as against Rs 410.70 million in the same quarter last year, an increase of 36%. It has reported net sales of Rs 6058.70 million for the quarter ended on Sep 30, 2011 as against Rs 5338.20 million in the same quarter last year, a rise of 13%. During the quarter, it reported earnings of Rs 10.56 a share.”

“At the current market price of Rs 594, the stock is trading at 13.06 x CY11E and 11.42 x CY12E respectively. Earning per share (EPS) of the company for the earnings for CY11E and CY12E is seen at Rs 45.49 and Rs 52 respectively. Net Sales and PAT of the company are expected to grow at a CAGR of 23% and 43% over 2009 to 2012E. SKF and Bombardier Aerospace have entered into a long-term contract for SKF to supply over 40 different rod assemblies and titanium bearings for Bombardier's all new CSeries aircraft. The Company has posted profit of Rs 556.90 million for the quarter ended on Sep 30, 2011 as against Rs 410.70 million in the same quarter last year, an increase of 36%. Buy the stock for a target price of Rs 671” says Firstcall Research report.

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