SKF India Q1 Revenue Up 27% YoY to ₹5.9 Billion

Q1 FY27 Key Metrics:

Revenue: ₹5.9 billion, representing 27% year-over-year (YoY) growth and -1% quarter-over-quarter (QoQ) change
Sales (excluding other operating income): ₹5.5 billion with 22% YoY growth and -0.7% QoQ change
Gross Margin: Approximately 51% in Q1 FY27, compared to 42.5% in Q4 FY26 (6.5% QoQ improvement)
EBITDA Margin: Improved by 7 basis points YoY and 540 basis points QoQ
Profit Before Tax: 14.3%, representing 61 basis points improvement YoY and 527 basis points improvement QoQ (excluding exceptional items from previous quarter)
Volume Growth: 22% YoY volume increase, though volumes declined 6.3% QoQ with price/mix contributing +5.6% to sales

Sales Mix by Channel (Q1 FY27):

OEM Segment Breakdown:

New Business Wins:

Secured wheel-end bearing business from a major passenger vehicle manufacturer for localization of their bearings
Business nomination received in Q1 FY27 with production commencement scheduled for Q4 CY2028
Represents first wheel-end offering with this customer, establishing foundation for long-term engagement

Capacity Expansion Plans:

Total planned capex: ₹500 crore
FY27 capex guidance: ₹170-180 crore
Primary focus: Haridwar factory capacity expansion for 2-wheeler and driveline components
Timeline: Majority of capex to be completed by FY28, with potential spillover to FY29
Capacity enhancement: Unlocked 5 million pieces through technological upgradation and efficiency improvements in current assets

Electric Mobility Strategy:

Multiple EV orders secured (mentioned in previous quarters)
Developmental platforms expected to commence production towards last quarter of calendar year 2028
Focus on traction motors for 2-wheelers and e-drive conductive brush ring solutions
Currently in sample development and ramp-up phase with material revenue impact expected from mid-2027 onwards

Manufacturing Decarbonization:

All three plants (Pune, Bangalore, Haridwar) achieved decarbonized status with over 98% renewable energy sourcing
Received group certification as decarbonized plants

Water Management:

Bangalore site: Achieved 2x water positivity (returning 2x water to environment compared to consumption)
Haridwar site: Achieved 2.57x water positivity
Pune plant: Working toward water positivity target

Customer Recognition:

CSR Initiative:

Partnership with Special Olympics Bharat to identify intellectually challenged talent
Sent team to Sweden for Gothia Cup where they won bronze medal after defeating Finland

Growth Guidance:

Management considers current 17% margin level as normalized and sustainable for the next 2 years
Previous revenue growth guidance of 12% exceeded with Q1 performance of 27% YoY growth
Export business expected to remain around current 8% level as it is not a strategic priority

Market Conditions:

IIP growth stable at 4.8% for Q1 FY27
Manufacturing PMI at 54.4 for June 2026
Automotive production showed upward trend for 2 and 3-wheelers, while passenger and commercial vehicles declined marginally
Iron and steel production declined during the quarter

Margin Drivers:

QoQ gross margin improvement attributed to product mix and inventory revaluation effects (FIFO method)
Commodity inflation discussions with OEMs ongoing with typical 1-2 quarter lag in price realization
Trading margin improvement expected as internal capacity reduces dependency on SKF Industrial purchases

Segment-specific Outlook:

Vehicle Aftermarket: Experiencing volume challenges with slight revenue decline; focus on protecting profitability while improving volume through strategic initiatives over next 5 months
Industrial Business: Not a growth priority; expected to decline over coming years as capacity shifts to automotive customers
Portfolio Rationalization: Ongoing optimization of manufacturing locations and product SKUs, with no material FY27 impact expected