Schaeffler India, 2 more midcap stocks get ratings upgrade from Kotak Equities. Here’s why

While Schaeffler has fallen by 17%, Timken and SKF's declines stand at 20% and 22%, respectively. This is despite the headline index Nifty gaining over 10% during this period.

Auto components manufacturers , and have been upgraded to 'Add' from an earlier 'Sell' rating by Kotak Institutional Equities, which sees good entry points in these midcap stocks following a 17-22% correction over the past 6 months.

While Schaeffler has fallen by 17%, Timken and SKF's declines stand at 20% and 22%, respectively. This is despite the headline index gaining over 10% during this period.

The bearing companies’ recent stock price corrections was on account of weakness in the export market and temporary slowdown in select domestic industrial segments due to the looming election, Kotak said as it sees the medium-term growth drivers remaining in place with the railway (Timken and SKF), export (Timken and Schaeffler) and aftermarket segments (SKF and Schaeffler) driving growth.

These stocks were trading in the red amid weakness in the overall market, falling up to 3%.

Kotak expects recovery in exports, domestic railways and aftermarket segments from 2HCY24E. "We remain constructive on medium term growth prospects, arising from the e-mobility segment for Schaeffler and Timken’s entry into the roller bearing segment. Recovery in export will also drive margin expansion for Schaeffler and Timken, in our view," the brokerage said in a note.

Schaeffler India: Target: Rs 3,000

Kotak increased its CY2025-26E EPS by 1-2% on higher revenue growth assumptions. Government’s focus on enhancing railway infrastructure, coupled with constant addition of new products and expansion of distribution reach, to drive its strong growth. In its view, export segment demand is expected to recover from 2HCY24E, which will support profitability.

Timken: Target: Rs 2,800

Kotak fine-tuned its FY2025-26 EPS estimates expect demand trends to improve from 2QFY25E, especially driven by the railways and off-highway segments. It expects the company to deliver a strong EPS CAGR of 16% over FY2023-27E.

SKF India: Target: Rs 4,400

Kotak has maintained its FY2024-25E EPS estimates and increased our FY2026E EPS estimates by 3%. It has revised its fair value of Rs 4,400 from Rs 4,150 mainly on roll-over to June 2026E, implying a multiple of 30X FY2026E EPS. "We are ascribing lower multiples to SKF as compared with Schaeffler and Timken, given the lack of focus on the export segment and its localization mix lagging peers," this brokerage said.

Also Read:

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

Source: Stocks-Markets-Economic Times

Последние публикации
Swiss voters reject more powers for landlords on subletting
24.11.2024 - 19:00
Former BP boss Looney to chair US data company Prometheus Hyperscale
24.11.2024 - 19:00
'Wicked,' 'Gladiator II' bring in $169.5 million in domestic box office
24.11.2024 - 18:00
Indian regulator rejects Apple request to put antitrust report on hold
24.11.2024 - 17:00
Uber What is the risk to deportation from Trump's immigration policy on rideshare and food delivery
24.11.2024 - 17:00
Brazilian meat suppliers stop deliveries to local Carrefour retailers, media say
24.11.2024 - 16:00
Thyssenkrupp: expert opinion gives positive view for steel business
24.11.2024 - 14:00
Saudi Arabia stocks higher at close of trade; Tadawul All Share up 0.21%
24.11.2024 - 14:00
Experts give positive update on Thyssenkrupp Steel, reports Spiegel
24.11.2024 - 12:00
US SEC issues summons for India's Adani, nephew on bribery allegations
24.11.2024 - 12:00
What Trump's potential tariffs mean for European auto stocks?
24.11.2024 - 11:00
5 big analyst AI moves: Nvidia earnings good for TSMC, Apple gets new bull-case PT
24.11.2024 - 11:00
UBS looks at key developments that will shape the next stage of this decade
24.11.2024 - 11:00
3 times sky-high market valuations ended in big corrections
24.11.2024 - 10:00
COP29 agrees deal to kick-start global carbon credit trading
23.11.2024 - 19:00

© Analytic DC. All Rights Reserved.

new
Анализ рынка Как повлият завтра отчет NFP на курс доллара США?