SKF India Industrial Eyes Profit Surge Post-Demerger

SKF India Industrial is set to experience a substantial increase in profitability, with projected EBITDA margins rising from approximately 13% to 17-19% over the next three to four years. This strategic uplift is underpinned by a significant capital expenditure program amounting to ₹800-950 crore, positioning it as a key value driver after its recent demerger and listing. The company anticipates initial margin growth into the mid-teens, gradually climbing to its target range, with potential temporary stabilization due to new investments.

The recent demerger has resulted in two distinct business entities: SKF Automotive, focusing on EVs and safety technologies with planned investments of ₹410-510 crore by 2030, and SKF Industrial. The latter will concentrate on sectors like manufacturing, railways, and renewables, backed by its larger investment plan. This strategic division aims to capitalize on India's robust infrastructure and manufacturing growth.

Approximately 70-75% of SKF Industrial's capital expenditure will be allocated to a new, state-of-the-art manufacturing facility in Pune, slated for completion by 2028. This facility will feature advanced automation and AI integration. The company expects high initial utilization rates and anticipates initial returns on invested capital of around 15%, increasing to approximately 20% as operations mature. Revenue is expected to grow into low double digits, driven by end-user consumption and project-based business.