Buy Timken India, target price Rs 2700: JM Financial
Timken India Ltd., incorporated in the year 1996, is a Mid Cap company (having a market cap of Rs 18330.81 Crore) operating in Engineering sector.
By ETMarkets.com | Updated:
Agencies
JM Financial has buy call on Timken India with a target price of Rs 2700. The current market price of Timken India Ltd. is Rs 2430. Time period given by analyst is one year when Timken India Ltd. price can reach defined target.
Timken India Ltd., incorporated in the year 1996, is a Mid Cap company (having a market cap of Rs 18330.81 Crore) operating in Engineering sector.
Timken India Ltd. key Products/Revenue Segments include Bearing Accessories & Maintenance Products, Sale of services, Export Incentives for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 672.30 Crore, up 31.10 % from last quarter Total Income of Rs 512.80 Crore and up 39.13 % from last year same quarter Total Income of Rs 483.22 Crore. Company reported net profit after tax of Rs 121.30 Crore in latest quarter.
Investment Rationale
The brokerage notes that the valuation gap for Timken has narrowed vs. other bearing companies on PER basis given a) decline in share of traded goods YoY (47% of COGS vs. 50%) due to higher share of exports, aiding margin expansion, b) better return ratios due to operating leverage benefits as capacity utilisation improved, and c) improvement in pay-out ratio, through it is still lower vs. peers. It continues to maintain BUY with a TP of INR 2,700, valuing the stock at 40x given better EPS growth profile of 25% CAGR over FY22-24E (vs. 17% CAGR in the past 5/10 years) and superior RoE of 22-23% vs. 16% in the past 10 years.
Promoter/FII Holdings
Promoters held 67.8 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.9 per cent, DIIs 13.0 per cent.
Timken India Ltd., incorporated in the year 1996, is a Mid Cap company (having a market cap of Rs 18330.81 Crore) operating in Engineering sector.
Timken India Ltd. key Products/Revenue Segments include Bearing Accessories & Maintenance Products, Sale of services, Export Incentives for the year ending 31-Mar-2021.
Financials
For the quarter ended 31-03-2022, the company reported a Standalone Total Income of Rs 672.30 Crore, up 31.10 % from last quarter Total Income of Rs 512.80 Crore and up 39.13 % from last year same quarter Total Income of Rs 483.22 Crore. Company reported net profit after tax of Rs 121.30 Crore in latest quarter.
Investment Rationale
The brokerage notes that the valuation gap for Timken has narrowed vs. other bearing companies on PER basis given a) decline in share of traded goods YoY (47% of COGS vs. 50%) due to higher share of exports, aiding margin expansion, b) better return ratios due to operating leverage benefits as capacity utilisation improved, and c) improvement in pay-out ratio, through it is still lower vs. peers. It continues to maintain BUY with a TP of INR 2,700, valuing the stock at 40x given better EPS growth profile of 25% CAGR over FY22-24E (vs. 17% CAGR in the past 5/10 years) and superior RoE of 22-23% vs. 16% in the past 10 years.
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Promoter/FII Holdings
Promoters held 67.8 per cent stake in the company as of 31-Mar-2022, while FIIs owned 2.9 per cent, DIIs 13.0 per cent.
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