The Hindu Business Line : Higher demand from auto sector drives up SKF India

Mumbai May 23 Increase in demand from the automobile sector and rise in capacities have pushed up the stock price of SKF India Ltd, the bearings manufacturing company.

The share price of the company touched its 52-week high today at Rs 499.80 before ending the day at Rs 476.25, a rise of 10.95 per cent over Tuesday's close of Rs 429.25.

Analysts said the positive results announced by the company for the last quarter have contributed to the rise in share price.

The stock is up 19.27 per cent week-on-week and 31.80 per cent month-on-month.

The company recorded a 62.78 per cent rise in its net profit for the quarter ended March 31, 2007 at Rs 36.66 crore.

"The consistency in the company's last three quarterly results has been very positive. Also, the production has increased, there is growth in volume and the increased capacities will reflect in the next quarter which has moved up the stock," said Ms Vaishali Jajoo, auto analyst, Angel Broking.

Also, when compared to its peers in the industry, the company is considered to be one of the top-end bearings producing company.

Eyes 25% growth

"The company expects a 25 per cent growth in its topline and bottomline and also has major investment plans. This has been a major guidance from the company," said Mr Umesh Karne, auto analyst, Emkay Shares and Stock Brokers.

"With the auto industry expected to grow between 12-15 per cent CAGR over the next year, the demand for the company's products are intact. The company is also a supplier to all the leading original equipment manufacturers," he added.

"The company also plans to de-risk its business model going forward by reducing its dependence on bearings, which currently contributes almost 90 per cent of its sales. In the next two-three years, this proportion is expected to decline to 80 per cent," stated a report from broking firm Sharekhan recently. "The demand thus looks good with an improved product mix from the company."

However, at the current stock price, market analysts do not find the valuations cheap.

More Stories on : Stocks | Bearings | tings & Forgings

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Short-selling can go a long way in steadying prices

Divi's Labs Q4 net up 4 times; to split shares

Higher demand from auto sector drives up SKF India

NDTV pares Q4 loss to Rs 17 lakh

Bear domination

CSE gets nod for sub-division of shares

S&P launches Shariah index for BRIC nations

Time Technoplast IPO subscribed 49.55 times