India · Delayed Price · Currency is INR SKF India Earnings Call Transcripts
Fiscal Year 2026
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Q4 and FY26 saw strong sales growth, but margins declined due to one-off gains in the prior year and demerger-related costs. Strategic focus remains on localization, premiumization, and EVs, with margin recovery and 6%-8% revenue CAGR targeted through 2028.
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Q1 FY2026 saw 6% sales growth, led by Industrial at 13%, while Automotive was flat and margins fell 530 bps due to demerger and FX costs. Demerger is on track, with capacity expansions and service business growth expected to drive future gains.
Fiscal Year 2025
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Shareholders approved a demerger to create two focused entities, with a 1:1 share allocation and new shares to be listed post-approval. Management addressed questions on timeline, costs, employee continuity, CapEx, and localization, aiming for enhanced growth and profitability.
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Q4 sales grew 1% year-over-year, with full-year sales up 8% and strong margin improvement due to transfer pricing adjustments. CapEx will double for capacity expansion, and the demerger process is on track, with margins expected to remain stable in FY25.
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The demerger will create two focused entities, automotive and industrial, each targeting distinct market drivers and customer needs. Both are expected to maintain strong financial performance, with continued investment and operational improvements, and the process is on track for completion by end of FY25.
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Revenue grew 15% YoY in Q3, led by strong industrial and automotive segment growth, though gross margins contracted due to higher traded product costs. Margins are expected to improve in Q4 as cost rationalization continues, with long-term gains anticipated from increased localization.
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Q1 FY 2024-25 saw net sales of INR 11.8 billion, with growth led by heavy industries and automotive segments. Manufacturing mix improved to 64%, and localization efforts continue, especially in industrial. Wind and railways are expected to recover, with CapEx focused on capacity expansion.