Buy Midcap Auto Ancillary Stock For High Gains, Board Recommends Rs 40/Share Dividend: ICICI Direct

Leading brokerage firm ICICI Direct has a Buy on SKF India Ltd. for a target price of Rs. 5,055 apiece. Considering the given target price and the current market price (CMP) of the stock, it is likely to give a decent return of 17% if purchased at the CMP.

On Wednesday, May 17, 2023, the Board of the company in a meeting recommended a Final Dividend of Rs. 40/share for the financial year 2022-23. SKF India is a midcap Auto Ancillary sector company. It has a market valuation of Rs. 21,450.39 crore.

Recommends Final Dividend of Rs 40/share

"The Board decided to recommend to the members final dividend of Rs. 40/- per equity share for the financial year ended 31St March 2023, which shall be paid/dispatched within 30 days from the date of ensuing Annual General Meeting ('AGM'), if declared and approved by the members at the AGM," the company said in an exchange filing.

Q4FY23 Results

According to ICICI Direct, Revenue in line but margins lower than estimates. Revenue increased 5.4% YoY (+1.6% QoQ) to Rs. 1094.7 crore; in line with estimates. EBIDTA margin at 15.3% (lower than estimate of 17.2%) was largely flattish YoY as higher other cost negated the impact of lower raw material cost. EBIDTA came in at Rs. 167.0 crore (vs. estimate of Rs. 190.7 crore); up 4.7% YoY but down 9.3% QoQ. PAT increased 12.3% YoY (+5.4% QoQ) to Rs. 122.9 crore.

Buy Stock of SKF India For A Target Price of Rs. 5,055/sare

According to the brokerage firm, SKF is poised to benefit substantially from the healthy domestic demand from industrial segments led by a further revival in private capex and pick-up in demand from the automotive segment. "We continue to remain positive and retain our BUY rating on the stock. We value SKF at Rs. 5055 i.e. 40x P/E on FY25E EPS," the brokerage has said.

Stock Outlook

On NSE, the last traded share price of SKF India is Rs. 4,338.85 apiece. The stock surged 0.17% as compared to its previous close of Rs. 4,331.60 apiece. Its 52 week high is Rs. 5,175 apiece and the 52-week low is Rs. 3,111.55 apiece, respectively.

It has given 0.77% negative return in 1 week and 5.29% positive return in 1 month. The stock gave 34.2% positive return in 1 year. In 3 years, it has given 210.71% positive return and in 5 years, it has given 146.11% positive return.

About - SKF India Ltd.

SKF India is one of the leading bearing manufacturers known for its deep groove ball bearings and has a presence across the industrial & auto sector. Auto & industrial have been contributing 50% each to SKF's topline over the years, with a slight tilt on either side depending on macros. SKF boasts a debt free balance sheet, coupled with consistent RoCE & RoICs upwards of 20%.

Disclaimer - The stock has been picked from the brokerage report of ICICI Direct. Greynium Information Technologies, the Author, and the respective Brokerage house are not liable for any losses caused as a result of decisions based on the article. Goodreturns.in advises users to consult with certified experts before making any investment decision.