In Tuesday's intra-day trade, shares of Timken India skidded nearly 6% after the company's net profit fell short of analyst expectations. The stock opened 3.40% lower on the BSE at ₹2,898 against the previous close of ₹3,000, and it continued to fall in early trade, reaching an intraday low of ₹2,795, the stock then finished the day with a loss of ₹169.35 or 5.65% at ₹2,828.65, reaching at a one-month low.
On Monday, the company reported a 23.23% YoY jump in its consolidated net profit at ₹97.6 crore during the September-ending quarter as against a net profit of ₹79.2 crore in the same quarter of last fiscal. But sequentially, the net profit was down 17.35%.
The revenue from operations rose 27.63% to Rs716.9 crore, as against ₹561.7 crore in the corresponding quarter of the last fiscal. In Q2, the company's EBITDA margin dropped to 19%, the lowest level since the quarter ending in June 2021. On a YoY basis, the EBITDA margin fell 319 basis points.
On September 09, the stock hit an all-time high of Rs.3,493. The stock began to rise in May after falling to a 52-week low of ₹1,734, and it has since given its shareholders a 65.45% return. The market price of the stock has increased by 223.62% in the last three years and 262.54% over the last five years. Timken India commands a market capitalization of Rs. 21,362.12 crore. It has an EPS of Rs. 54.08 and a price-to-book value of 13.62x.
The domestic brokerage firm, ICICI direct, has given a 'buy' call on the stock with a target price of ₹3,560 in its research report dated August 16, 2022.
Prior to this, in June, global brokerage firm, JM Financial, has given a 'buy' call on Timken India with a target price of Rs. 2,700. The brokerage noted that the valuation gap for Timken has narrowed vs. other bearing companies on a PER basis given the decline in the share of traded goods YoY due to the share of exports, aiding margin expansion and better return ratios on the back of operating leverage benefits as capacity utilisation improved and improvement in pay-out ratio, though it is still lower vs. peers.
Timken India is primarily into the manufacture and distribution of tapered roller bearings, components and accessories for the automotive sector and the railway industry. It also provides maintenance contract services and refurbishment services.
Timken India Limited (TIL) was incorporated in 1987 as Tata Timken Limited (TTL), a joint venture between Tata Iron and Steel Company (TISCO) and The Timken Company, a world leader in bearings. Timken acquired from Tata Steel its 40% stake in Tata Timken Limited. The name of the company was changed to Timken India Limited, its website shows.
The company saw its FII holdings rise to 3.9% in the second quarter of FY23 from 2.8% in Q2FY22. While the promoters hold 67.8% of the shares in the company, DIIs hold 12.1% of the shares, and regular shareholders own 16.2%.
An average of 05 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
