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News: Revenue increased by 9.0% YoY (+5.0% QoQ) to Rs 1149.6 crore in Q1FY24. Gross margin at 39.8% (+64 bps YoY, +113 bps QoQ) and EBIDTA margin at 17.6% (+23 bps YoY, +239 bps QoQ) were improved marginally YoY primarily on account of lower raw material cost. Subsequently, EBIDTA was up 10.4% YoY (+21.5% QoQ) to Rs 202.9 crore. PAT came at Rs 154.4 crore, increased by 19.6% YoY (+25.6% QoQ) on account of increase in other income.
Views: Revenue growth at 9% YoY was slightly lower than expectations, possibly impacted by higher exposure in auto sector where volume numbers remained muted in some segments like 2W during the quarter. Though margins were maintained on YoY basis led by lower raw material costs. Going ahead, we believe that SKF is expected to benefit substantially from the healthy domestic demand from industrial segments led by further revival in private capex and pick-up in demand from automotive segment. Moreover, increasing focus on localisation and expanding share of after-market sales is expected to drive margins improvement in the coming period.
Impact: Neutral