Sumit Bilgaiyan
Schaeffler India is a the second largest player with market share of 17 percent and 45 percent in overall bearings industry and roller bearings segment, respectively.
Schaeffler’s exposure to the auto segment is 35 percent and industrial bearings contribute to 51 percent of sales. 14 percent of sales are catered to by exports.
While the company manufactures automotive bearings and part of industrial bearings (35 percent), balance 65 percent of industrial bearings are imported.
As a result traded industrial goods constitute 30 percent of overall
revenue, which are majorly imported from overseas Schaeffler Group companies. Recently, Schaeffler has reported decent results with 13 percent YoY revenue growth, which was driven by strong growth in automotive segments and steady improvement in industrial segments.
We expect profitability to improve going ahead led by price increases taken by the company. We maintain a buy with a target of Rs 6,095 considering the impending merger with group entities is positive and it would be EPS accretive from CY2019E.
Disclaimer: The author is Founder, Equity99. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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