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Centrum Report
Timken India Ltd. Q1 FY25 print was below our estimates; revenue /Ebitda/adjusted profit after tax grew 9.2%/ 3.8%/6.8%, driven by higher volumes across segments. Timken clocked highest ever June quarter sales. Despite subdued exports due to Red-sea issue, Q1 performance was led by India and driven by,
Persistent growth in rail segment (+31%),
Strong industrial/auto distribution growth (+29), and
Process segment (+22%).
Segment contribution, Railroad: 24%, Off-road: 19%, Distribution: 19%, Process: 19% and Exports: 20%. Management said with strong tech focus, Timken India being preferred partner, and with government focus on rail/wind, these segment to help driving growth. Gross margin cut to 30.4% (-182bp).
With higher other expenses (+7%), Ebitda margins settled at 17.9% (-93bp); profit after tax margin declined to 12.2% (-27bp). Timken attributed lower margin to higher input costs, rise in transportation/energy/labor costs, and inferior product mix.
We expect Timken India to witness strong demand and maintain market leadership across segment led by,
Strong market share in railways,
improvement in cement/steel/renewables, and
Maintain export share of ~25.
We retain 'Add' rating with target price of Rs 4,388 (implying 55 times FY26 earning per share). Rail, industrial distribution & process segments to lead; exports softness continues
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