Timken India soars 10% on plans to set up Gujarat manufacturing facility

The company will set up new manufacturing facility at Bharuch, Gujarat to manufacture Spherical Roller Bearings (SRB), Cylindrical Roller Bearings (CRB), and other components

Shares of Timken India soared 10 per cent to Rs 3,210 per share in Thursday’s intra-day trade after the company plans to set up new manufacturing facility at Bharuch, Gujarat, in order to manufacture Spherical Roller Bearings (SRB), Cylindrical Roller Bearings (CRB), and other components.

At 11:07 am; shares traded 8 per cent higher at Rs 3,164, as against 0.21 per cent decline in the benchmark index. In the past six months, the stock price of Timken India zoomed 71 per cent, as against 14 per cent rally in the S&P BSE Sensex. 

"The financing of capex will be done through internal accruals. The expected commercial production will begin from January 2025. The manufacturing plant at Bharuch, Gujarat wherein primarily Tapered Roller Bearings (‘TRB’) and its components are manufactured, another new facility will be set up in the same premises to manufacture SRB, CRB and components, which will enhance manufacturing capacity of the company," the management said.

Moreover, the company said that the addition of new capacity would enhance manufacturing capacity. SRB and CRB, meanwhile, will be used in industrial applications, where there are heavy load and moderate speed like wind turbines, gearboxes, mining and construction equipment.

Timken is working at maximum capacity utilisation in India. The company, at present, does not manufacture SRB and CRB in India. SRB and CRB are mainly imported from Timken group companies across the world and sold in India.

Therefore, analysts at ICICI Securities believe that since SRB and CRB have a good market in India, indigenization would help Timken to expand its EBITDA margins.

"The company has begun the new financial year with a full pipeline of outgrowth initiatives, and anticipates that industrial markets and customer demand will remain strong. The government’s pledge for an 'Atmanirbhar Bharat' and budget allocation in infrastructure will encourage bearing manufacturers to ramp-up local manufacturing capability," the company added.

That apart, reports suggest that the global bearing market will register a CAGR of 9.1 per cent between 2014 and 2025 (Source: Grand View Research, Inc., Report).

"As per the market research, global bearing market touched ~$60 billion in FY21, with India contributing around 3 per cent of the overall global bearing market. Since bearings are an integral component of all equipment, the ever so rising demand is a derivative of its diversified application in the global manufacturing sector, which is mainly the automotive and industrial sector," the company said.