Timken India Ltd. share price target

Companies like Larsen & Toubro and KEC with exposure to the Middle East and North Africa (MENA) region are expected to get impacted by the recent more than 60% fall in crude oil prices to US$22/barrel. This is expected to impact overall orders/awarding from the MENA region. Companies like Elgi Equipments, AIA Engineering, Thermax, Engineers India and Kalpataru Power with exposure to international geographies like Europe, Middle East, China for sales or essential raw material may get impacted. However, lockdowns in India, UK, Europe and other geographies due to Covid-19 are...

Timken's Q2FY20 performance was led by double digit growth in the railway segment, which contributed 24% to the topline. With strong traction in railway ordering and further push from Dedicated Freight Corridor, the railway segment is expected to play a vital role, going forward. Adding to this, the railway replacement market and bearing maintenance orders would further propel growth in the railway segments. The exports segment during the quarter grew 22% with European markets opening up. Exports are expected to further pick up with Bharuch plant starting to export from this...

Solid FY19, headwinds in mobile segment to impact growth TIL witnessed a solid performance across all segments in FY19, viz. railways, mobile (LCVs, HCVs and off highway), distribution (replacement market), process industries and exports. Their contribution to topline was at 18%, 22%, 17%, 8% and 24%, respectively (total ~90%). The remaining 10% contribution came in from ABC Bearings. Going ahead, headwinds in the automotive sector are expected to impact growth of mobile' segment and, thus, affect overall topline growth. On the whole, we expect Timken to clock...

Strong FY19, all segment except mobile' to grow in FY20-21E TIL saw a strong performance across segments in FY19, viz. railways, mobile (LCVs, HCVs, off highway), distribution (replacement market), process industries & exports. Their topline contribution was 18%, 22%, 17%, 8%, 24% respectively (total ~90%). Remaining 10% contribution came in from ABC Bearings. Going ahead, the management is expecting growth from all...

For Q3FY19, revenues came in at | 384.9 crore, up 38.1% YoY. We expected revenues of | 349.2 crore (25% growth) Gross margins were at 45.6% vs. 36.9% YoY. EBITDA margins were at 14.4% vs. 7.4 YoY. Gross margins, EBITDA margins were lower in Q3FY18 due to a change in product mix and high input prices during the quarter. We believe the same has now corrected in Q3FY19 Accordingly, absolute EBITDA and PAT grew 168.1% and 188.2% to | 55.6 crore and | 26.4 crore, respectively...

ICICI Securities Ltd | Retail Equity Research Timken India (TIL) reported its Q2FY19 numbers. The numbers are not comparable to historical numbers as the company reported...

ABC amalgamation to be EPS accretive from Year 1 We resume coverage on Timken India (Timken) and publish our revised numbers to factor in the consolidation of ABC Bearings (ABC). In our view, the amalgamation of ABC Bearings would be EPS accretive from FY19 as net profit of the consolidated entity should increase 17% (factoring in 11-month consolidation in FY19) vs. 11% stake dilution through a share swap. Over FY18-21, we forecast sales and earnings CAGR of 16% and 25%, respectively, for the consolidated entity, led by a) strong growth in the domestic CV market (entry in wheel bearings segment), b) bounce-back in exports on easing of capacity constraints and...

Top line growth owing to improved volumes: TMKN Q1FY19 results came in line with our estimates. YoY EPS grew by 44.3% on account of healthy revenue growth (27.8%) and EBITDA expansion of 134 bps. Revenue growth is due to improved volumes from domestic & export segments.

Timken India reported stellar Q1FY19 numbers that were above our estimates. Revenues came in strong at | 383.4 crore, up 27.8% YoY. We had estimated ~14% topline growth at | 341 crore Absolute EBITDA increased 40% YoY to | 59.3 crore. EBITDA margins came in at 15.5% vs. 14.1% YoY. Higher EBITDA margins were primarily due to lower other expenses, 18.3% of topline vs. 21.3% in Q1FY18. Gross margins fell ~200 bps YoY. Employee...

ICICI Securities Ltd | Retail Equity Research Timken India reported strong operational numbers in Q4FY18. Revenues came in strong at | 345.4 crore, up 32.6% YoY. We had estimated 15% topline growth at | 300 crore Absolute EBITDA increased 22.4% YoY to | 46 crore. EBITDA margins came in at 13.3% vs. 14.4% YoY. Lower EBITDA margins were primarily due to a decline in gross margins (dropped 210 bps YoY). We expected EBITDA margins of 15.4% for the quarter...

Top line to grow owing to improved volumes: Despite a YoY revenue growth of 13.9%, EPS de-grew by 31.9% along with an EBITDA contraction of 229 bps due to higher material expenses and employee expenses. We see the margin contraction phenomenon as temporary. In view of the synergies from ABC Bearings Ltd's acquisition coupled with growing railways business, we expect the revenueto grow at ~ 12% CAGR during FY17- FY20E with an improved EBITDA margin of 16.3% by FY20E.

Revenues came in at | 278.6 crore, up 20.6% YoY. We estimated revenues of | 263.8 crore for the quarter EBITDA declined 12.9% YoY to | 20.7 crore as the company reported weak EBITDA margins of 7.4% in Q3FY18. Lower EBITDA margins were on account of a sharp spike of 37.6% and 34.1% in employee and other expenses, respectively. Gross margins remained stable for the quarter. We estimated margins of 13.5% for the quarter PAT operating performance coupled with higher non-operating...

Revenues came in at | 310.2 crore, up 9.8% YoY. We estimated revenues of | 308.2 crore for the quarter EBITDA increased 13.1% YoY to | 53.8 crore as the company reported steady EBITDA margins of 17.3% in Q2FY18. We expected margins of 16.9% for the quarter PAT increased 24.7% YoY to | 37.3 crore as the company reported higher other income of | 14.8 crore vs. | 1.7 crore in Q2FY17 Exports, mobile segment strong, new opportunity to open up in railways...

ICICI Securities Ltd | Retail Equity Research Timken India (TIL) reported weak Q1FY18 numbers. The company reported topline, EBITDA and PAT, which were below our estimates Revenues came in at | 300 crore, up 6.3% YoY and below our...

Timken India (TIL), a leader in the niche segments of engineered bearings and mechanical power transmission products, has entered into a definitive agreement to acquire ABC Bearings Ltd through a court-approved amalgamation process ABC Bearings (ABC) is a manufacturer of tapered, cylindrical and spherical roller bearings and slewing rings. ABC operates primarily...

ICICI Securities Ltd | Retail Equity Research Timken India (TIL) reported dismal Q4FY17 numbers. The company reported a significant decline in topline, EBITDA and PAT numbers. This was mostly due to a continued miss in exports (6% decline YoY) Revenues came in at | 260.5 crore, down 4.2% YoY and below our...

ICICI Securities Ltd | Retail Equity Research Timken India (TIL) reported dismal Q3FY17 numbers. The company reported a significant decline in topline, EBITDA and PAT numbers. This was mostly due to a miss in exports to the tune of | 50 crore Revenues came in at | 231 crore, down 10% YoY and below our...

Mixed results for Q2FY17, growth story intact: Timken has registered slightly lower sales by -1.1% sequentially & 7.3% YoY growth for Q2FY17 owing to hard market dynamics. EBITDA & EBIT margins have contracted by 30 bps each QoQ mainly on account of rise in other expenses. However, Net profit margin has expanded by 70 bps sequentially to 10.1% on account of lower tax expenses in Q2FY17. H1FY17 performance has been impressive till now with 7.9%, 19.6% & 14.6% growth in revenue, EBITDA & PAT respectively YoY, along with an EBITDA margin expansion of 160 bps & 170 bps expansion in PAT margin.

valuations of over ~25x forward earnings due its niche expertise and sagar.gandhi@icicisecurities.com strong parentage. With moderate capex and strong balance sheet, we believe TIL is well placed to capture the upcoming opportunity in the railways, DFC, renewable and auto segment in addition to export led growth. Thus, we value the company at 29x FY19E EPS of | 21.2 and...

Growth to Unfold on Account of Improving Demand Environment: Stable revenue growth along with healthy margins - Timken has registered turnover growth of 8.8% sequentially & 8.6% YoY growth for Q1FY17 owing to improved volumes. EBITDA margin has contracted by 150 bps QoQ mainly on account of 15.5% rise in raw material costs & 9.5% rise in employee expenses. EBIT margin & Net profit margin have also contracted by 120 bps & 130 bps sequentially to 14.0% & 9.4% in Q1FY17.

Valuation and Outlook : While introducing FY18E, we have also re-visited the financials for FY17E. While global growth outlook remains gloomy, India is one of the few economies expected to deliver growth. Being a market leader in tapered roller bearings, which largely cater to Medium and Heavy Commercial Vehicle (M&HCV), off-highway equipments and railways markets, Timken is well positioned to benefit from the much anticipated economic revival. At CMP of Rs. 547, Timken is trading at 32.5x to its FY18E EPS. Timken, in view of auto industry revival, positive industry sentiments coupled with healthy zero debt balance sheet, is well positioned to grow in times ahead. We ascribe a multiple of 38.5x FY18E EPS, which is trailing twelve months PE and recommend a “BUY” rating for an upwardly revised target price of Rs. 648 representing an upside potential of 19%.