Timken India is into manufacturing, distribution and sale of antifriction bearings, primarily tapered roller bearings, cylindrical roller bearing and other bearing components and accessories. They are also in power transmission product brands & partner with renewable energy companies to power some of world’s largest wind mills. Timken offers products to defence, mining, aerospace, agriculture, rail, energy and automotive industry. It has state-of-the-art manufacturing plants in Jamshedpur in Jharkhand and Bharuch in Gujarat. It has a revenue breakup of 75% from domestic sales and 25% from export
Timken reported excellent Q4FY22 results.
What should Investors do?
Timken has a strong balance sheet coupled with decent growth prospects led by strong growth in Railways, Wind and Exports.
We maintained our rating to BUY
Target Price and Valuation: We value Timken at ₹ 2810 i.e. 45x P/E on FY24E EPS
New Stock Ideas
Apart from Timken, we also like NRB Bearings in our capital goods coverage universe.
|(| Crore)||FY19||FY20||FY21||5 year CAGR (FY16-21)||FY22||FY23E||FY24E||3 year CAGR (FY21-24E)|
|EBITDA margin (%)||17.3||22.5||17.9||-||23.2||23.5||23.5||-|
|Income from Operation||667.4||553.7||475.4||40.4||510.0||30.9||Decent Performance on Industrail and Services segment side|
|Cost of materials consumed||197.3||202.2||144.4||36.6||193.8||1.8|
|Purchase of stock-in-trade||164.0||114.0||137.2||19.5||128.9||27.2|
|Change in inventories||(12.4)||0.0||(9.4)||(47.8)|
|EBITDA Margin (%)||26.9||19.9||18.3||867 bps||22.4||457 bps||Margins sustain led by cost optimasation, operating leverage and higher gross margins|
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