SKF India (500472) Q1 25/26 earnings summary

Executive summary

• Net sales grew 6.2% year-over-year in Q1 FY2026 to 12.6 BINR, led by 13% growth in the Industrial segment, while Automotive was flat and Exports declined by 0.9%.

• Margins declined by 530 basis points year-over-year, mainly due to demerger-related one-time costs, higher employee expenses, increased depreciation, and FX losses.

• Net cash flow from operations increased 13% year-over-year to 2.2 BINR, supported by improved net working capital.

• Demerger process is progressing, with board, shareholder, and regulatory approvals underway, aiming to create two independent, focused companies for Automotive and Industrial businesses.

• Unaudited standalone and consolidated Q1 FY26 results were approved, with an unmodified opinion from auditors.

Financial highlights

• Standalone revenue from operations for Q1 FY26 was ₹12,831.5 million, up from ₹12,062.2 million in Q1 FY25.

• Industrial segment contributed 53% of sales, Automotive 39%, and Exports 8%.

• Standalone profit for the period was ₹1,186.0 million, compared to ₹1,590.4 million in Q1 FY25.

• Service business contributed around 10% of total revenue, with 6% from Industrial.

• Profit before tax margin dropped to 12.7% from 18% year-over-year.

Outlook and guidance

• Demerger expected to create two independent, focused companies to accelerate growth and profitability, with listing and trading anticipated after regulatory approvals.

• Industrial business expected to grow 8%-10% annually, with higher growth anticipated post-2027 as new capacities come online.

• Automotive growth expected to accelerate with capacity expansion in 2027-2028, targeting above-industry growth and further market share gains.

• Margins are expected to remain muted for the next year due to ongoing demerger costs, with a return to the 16%-19% range projected from 2028 onwards.