ICICI Direct recommended hold rating on SKF India with a target price of Rs 1845 in its research report dated dated May 17, 2019.
ICICI Direct's research report on SKF India
SKF India (SKF) reported weak Q4FY19 results, below our estimates. Revenues grew 6.4% YoY at Rs 748.4 crore. EBITDA margins came in at 14.8% vs. 15.1% YoY. Lower margins were on account of lower gross margins (-190 bps YoY). Other expenses de-grew 2.8% YoY. Accordingly, absolute EBITDA increased 4.6% YoY. PAT came in at Rs 82.2 crore, up 14.9% YoY primarily due to higher other income (forex income of Rs 6.7 crore) and lower depreciation expenses, which grew 55% and 0.3% YoY, respectively.
We value the company at 24x P/E on FY21E EPS to arrive at a target price of Rs 1845/share. We have a HOLD recommendation on SKF.
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