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Centrum Broking Report
Timken India Ltd. continues to disappoint on revenue front in Q3 FY24 as well. Revenue remained almost flat (0.5% up) YoY to Rs 6,122 million (centrum – Rs 5,714 million / consensus – Rs 6,425 million). December- 23 results presentation of Timken Co, U.S. have highlighted that organic revenue “up” in India though. We estimate ~35% YoY decline in export to Rs 793 million led to flat revenue performance.
However, improvement registered in gross margin YoY by 99 basis points to 40.5% (centrum – 41.5%). This coupled with 8% YoY decline in employee cost arrested Ebitda margin fall to just 27 bps YoY to 16.7% (centrum – 16.7% / consensus-19.1%).
With no YoY growth in revenue coupled with a 26% YoY drop in other income off-set the gains led by a surprising YoY decline of 8% and 6% in the employee cost and depreciation respectively and a flat tax rate.
This has resulted in a YoY drop of 4.3% in the profit after tax to Rs 675 million versus Rs 705 million (centrum – Rs 630 million / consensus - Rs 940 million). PAT margin at 11% versus 11.6% YoY, a drop of 55 bps (centrum – 11% /consensus- 14.6%).
We estimate tepid revenue and PAT compound annual growth rate for FY23-FY26E at 7.8% and 3.8% as against FY21-FY23 revenue and PAT CAGR of 41% and 65% respectively.
We maintain 'Sell' (42 times H1 FY26E earning per share of Rs 55) with target price of Rs 2,297 (Unchanged).
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