SKF India: Rally punctured

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SKF India declined 12.9 per cent to Rs 409.80 when the parent company, SKF Group, announced on June 7 that it would build a Rs 270-crore greenfield factory for manufacturing large size bearings.

The announcement led to heavy offloading on the Bombay Stock Exchange with 726,382 shares changing hands on Friday. SKF India share price rose from a low of Rs 388.30 on May 15 to Rs 498 on May 25. Since then, it dipped to Rs 452.20 on June 1, before bouncing back to Rs 470.45 on June 7.

The factory is expected to start production in 2008. The investment in the new facility will be carried out through SKF's existing subsidiary in India "" SKF Technologies India. SKF Group holds 53.58 per cent stake in SKF India.

SKF India's current market price of Rs 409 discounts its trailing 12-months earnings per share of Rs 22 by a PE multiple of 18.59. SKF India net profit rose 62.79 per cent to Rs 36.66 crore in first quarter of March 2007. Sales rose 21.59 per cent to Rs 359.82 crore.

SKF India manufactures a product range comprising about 60 sizes of deep groove ball bearings, 70 sizes of taper roller bearings, textile machinery components, automotive specials, bearing accessories like housings, sleeves etc to cater to the needs of the automotive, electrical and industrial OEMs and after market customers.