SKF India Q1FY26 – Premium Bearings Maker with 44x P/E, -25% Quarterly Profit Drop, and an Industrial Demerger Spinning Like a Fidget Spinner
1. At a Glance
SKF India is the desi arm of the Swedish bearings behemoth AB SKF, which has been around since 1907 (back when Titanic was still floating). Market cap: ₹23,413 crore. CMP: ₹4,741. P/E: a spicy 44.6, which means investors are paying luxury SUV rates for a company that basically makes metal rings that spin smoothly. ROE? 21.4% — very respectable, like a CA who files taxes on time.
But here’s the plot twist: Q1FY26 saw profits crash by 25% YoY to ₹119 crore despite sales growing 6.4%. Margins have wobbled more than your scooter on a monsoon pothole. And yet, the stock trades at 9x book value. Clearly, the market believes “bearings” are as cool as AI.
Is this justified faith in SKF’s engineering supremacy, or are we all overpaying for ball bearings like they’re NFTs?
2. Introduction
SKF India is like that rich NRI cousin who shows up at weddings in an Armani suit but secretly eats dal-chawal. Globally, AB SKF is a 44,000-employee juggernaut. Locally, SKF India has positioned itself as the “Swiss watchmaker” of bearings. Customers: auto OEMs, railways, industrial machines, and now EV makers. Basically, if something rotates in India (from scooters to turbines), SKF has probably billed it.
But being fancy comes with baggage. Royalty fees to Sweden? ₹115 crore in FY24. Related-party purchases? ₹1,600 crore. So yes, profits rotate back to Stockholm almost as smoothly as the bearings rotate on your Royal Enfield.
Meanwhile, SKF India is juggling between auto and industrial segments while prepping a big demerger — Industrial business to be spun off into a separate entity. Investors love “unlocking value” stories, but sometimes all it does is unlock confusion.
Tell me, would you pay a premium for a demerger story even when quarterly profits are sliding?
3. Business Model – WTF Do They Even Do?
SKF India makes money in three flavors:
Industrial (50%): Bearings, seals, lubrication systems, remanufacturing. Think railways, heavy industries, renewable energy turbines. Their dominance here is like Amul in dairy.
Automotive (40%): Customized bearings for EVs, cars, trucks, and even two-wheelers. Also strong in aftermarket spares through 430+ distributors. Translation: your Maruti Swift and Ola scooter probably owe them a bearing.
Exports (10%): Bearings shipped to Europe, Brazil, US, and Asia. They launched new products for Euro OEMs in FY24, proving Indians can make firang cars spin smoother.
Revenue breakup FY24: Manufacturing (56%), Trading (40%), Services (4%). So yes, 40% is basically “buy and sell.” SKF India is like that coaching class that teaches but also resells books at MRP.
