SKF India (500472) Q3 24/25 earnings summary

Executive summary

• Announced separation of automotive and industrial businesses to unlock value, improve capital allocation, and address distinct customer needs and industry trends.

• Unaudited standalone and consolidated financial results for Q3 and nine months ended December 31, 2024, were approved, with statutory auditors issuing an unmodified review report.

• Board approved key management changes, including resignation and new appointments in director and senior management roles.

• Automotive and industrial segments to operate as independent entities, with no immediate plans to merge technology centers.

• Strong revenue growth of 15% for the quarter and 10% for the nine-month period, driven by both market share gains and underlying market strength.

Financial highlights

• Consolidated revenue from operations for Q3 FY25 was INR 12,561 million, up from INR 10,919 million in Q3 FY24.

• Consolidated net profit for Q3 FY25 stood at INR 1,095 million, compared to INR 1,321.5 million in Q3 FY24.

• Gross margin contracted by approximately 600 basis points year-over-year, mainly due to higher traded product costs.

• Margins improved sequentially from Q2 to Q3, with further rationalization expected in Q4.

• Traded business accounted for 39% of overall sales in Q3.

Outlook and guidance

• Demerger of the industrial business has been approved by the board but is pending regulatory approvals and not yet reflected in the financials.

• Expect further improvement in gross margins in Q4 as traded product costs rationalize.

• Infrastructure spending to continue driving growth in metals, heavy industry, and general machinery segments in the near term.

• Long-term margin improvement anticipated through increased localization.