SKF India hosted a conference call on Feb 13, 2025. In the conference call, the company was represented: by Mr. Mukund Vasudevan, Managing Director and Mr. Ashish Saraf, Chief Financial Officer.

Key takeaways of the call

The company is dividing its automotive and industrial businesses into two distinct entities to improve capital allocation and generate additional value.

The Industrial Business of the Company is proposed to be demerged into SKF India (Industrial), a wholly owned subsidiary of the Company. SKF Industrial will issue 1 fully paid-up equity share of Rs 10 each for every 1 fully paid-up equity share of Rs 10 each. New shares of SKF Industrial will be listed on BSE and NSE subject to receipt of requisite approvals.

Management stated that separation of these businesses would facilitate a clearer focus on distinct opportunities to enhance customer value, accelerate growth as well as improve efficiency and competitiveness for both the businesses. Each business would be able to address independent growth plans, pursue efficient capital allocation, attract different sets of investors, and strategic partners.

In Q3 FY25, EBITDA margin decreased due to high cost of the traded products. Going ahead, the EBITDA margin is likely to improve to 14-15% from FY26 because of localization, customer mix, and improvement in manufacturing & procurement.

In Q3 FY25, industrial segment grew 23% YoY supported by strong distribution, heavy metals and renewables. Distribution business grew around 20% YoY, general machinery 23% YoY, wind 16% YoY, and rail and defense around 23% YoY. Outlook continues to be strong, driven primarily by infrastructure spending.

In the general machinery side, the company continue to increase its market share with existing OEMs as well as onboarding a lot more new OEMs directly.

In Q3 FY25, automotive segment grew 10% YoY. Automotive aftermarket we saw a strong growth of around 18% YoY. 2-wheelers grew by around 10% YoY, passenger vehicles 11% YoY and tractor business around 30% YoY.

Going forward, management anticipates strong demand for two-wheelers (2W) and a seasonal trend for passenger vehicles.

In Q3 FY25, industrial business contributed 54% to revenue, automotive 39% and exports 7%.

In Q3 FY25, wind business contributed 4-5% to overall revenue. Its margin continues to be in range of mid to high-single digit.

Going forward, the company intends to increase its market share of high-speed trains.

The automotive business is 95% localized, while the Industrial business is 40% localized.

The company is continuously looking at opportunities to export.

Management guided Capex of Rs 120-130 crore in FY25. Out of which Rs 100 crore is already spent during 9M FY25.

Management commentary: Mukund Vasudevan - Managing Director, SKF India, said, “We delivered excellent revenue growth in Q3 2024. Overall, while SKF India grew by 15% (~2X GDP), the Industrial business grew 23% YoY and our Automotive business grew 10% YoY. This performance underscores the resilience of our strategy and our ability to adapt to evolving market dynamics. By accelerating local manufacturing, innovating based on our segment-driven approach, and reinforcing our commitment to sustainability, we are strengthening our leadership in the industry. We remain focused on delivering superior value to our customers while driving long-term profitable growth for our stakeholders.”