At a Glance

Timken India – the bearing maker that keeps India’s wheels (literally) moving – posted Q1 FY26 PAT ₹104 Cr on revenue of ₹809 Cr, showing modest 8% profit growth despite weak industrial demand. The company remains almost debt-free, flexing a 20.9% ROCE like a corporate gymnast. But here’s the kicker: at P/E 54.8x, this stock is priced like it makes iPhones, not bearings. Promoter holding dropped to 51%, FIIs trimmed stakes, yet the dividend yield is just 1%. Investors, hope you like paying for premium steel balls.

Introduction

Timken India, part of the global Timken empire, is the silent backbone of locomotives, windmills, and heavy equipment. It manufactures bearings that nobody notices until they fail – like the IT team in your office. Q1 FY26 wasn’t spectacular: revenue grew a humble 3% YoY, margins stayed at 18%, and PAT crawled to ₹104 Cr. But the stock? Trading at 55x earnings. Why? Because the market thinks this is not just another bearing company – it’s the bearing company.

So, do fundamentals justify this royalty? Or is this just FOMO dressed as precision engineering?

Business Model (WTF Do They Even Do?)

Timken makes anti-friction bearings, components, mechanical power transmission products, and offers maintenance/refurbishment services. Customers? Railways, auto OEMs, wind energy, heavy industries. Revenue streams are diversified, but demand is cyclical. The company thrives on tech superiority and brand trust – nobody wants cheap bearings failing on a bullet train.

Financials Overview

• Q1 FY26 Revenue: ₹809 Cr (↑3.2% YoY)
• Operating Profit: ₹142 Cr (OPM 18%)
• PAT: ₹104 Cr (↑8.2% YoY)
• EPS: ₹13.86

Annualized EPS = ₹13.86 × 4 = ₹55.44
At CMP ₹3,319, fresh P/E = 59.8x (a notch higher than stated 54.8x – market loves optimism).

Commentary: Revenue growth is crawling, margins stable, but valuation screams “perfection already priced in”.

Valuation

1. P/E:
   • Sector avg ~40x
   • FV = 55.44 × 40 = ₹2,220
2. EV/EBITDA:
   • FY25 EBITDA ₹592 Cr, EV/EBITDA avg 20x → EV ₹11,800 Cr → FV ≈ ₹2,500
3. DCF (modest growth):
   • FCF ~₹350 Cr, growth 8%, WACC 10% → FV ≈ ₹2,700

🎯 Fair Value Range: ₹2,200 – ₹2,700
(Current price ₹3,319 = premium tag)

What’s Cooking – News, Triggers, Drama

• Capex: ₹592 Cr CWIP – expanding capacity.
• Promoter stake cut to 51% – raising eyebrows.
• Demand tied to railways and industrial recovery.
• Trigger: If Indian Railways orders flood in, Timken will laugh to the bank.

Balance Sheet

Remark: Cleaner than a Swiss lab – near-zero debt.

Cash Flow – Sab Number Game Hai

Remark: Cash from ops solid, but heavy investing eats liquidity (capex hungry).

Ratios – Sexy or Stressy?

Remark: Ratios scream quality, but valuation is nosebleed high.

P&L Breakdown – Show Me the Money

Remark: Revenue growth sluggish, profit flat-ish, but margins strong.

Peer Comparison

Remark: Timken is the priciest, yet not the fastest grower.

Miscellaneous – Shareholding, Promoters

• Promoter Holding: 51.05% (down from 67%)
• FIIs: 9.4%
• DIIs: 27.7%
• Public: 11.8%

Promoter trimming is a yellow flag. But high DII confidence keeps it afloat.

EduInvesting Verdict™

Timken India is the Mercedes of bearings – reliable, premium, and expensive. Fundamentals are strong, margins healthy, debt negligible. But revenue growth is modest, and valuation is stretched like a rubber band.

• Strengths: Brand, margins, low debt, strong ROCE.
• Weakness: High valuation, slow growth.
• Opportunities: Railways expansion, industrial capex revival.
• Threats: Promoter stake cuts, cheaper competitors, global slowdown.

Verdict: Great company, pricey stock. If you buy here, pray that railway orders come faster than train delays.

Written by EduInvesting Team | 31 July 2025
Tags: Timken India, Bearings, Q1 FY26 Results, Capital Goods