Sekhar told CNBC-TV18, "SKF is a blue chip multinational company which is a leader in bearings segment in India. It outsources some of the bearings from its parent while some are manufactured in house. Its growth is highly dependent on the revival and the ultimate performance of the industrial segment in India as well as the auto segment. Expectedly its sales took a hit because of the sudden slowdown in the macro environment but with a pickup in both autos and industrials, its topline has started improving while its margins have already improved in the last couple of quarters because of the fall in commodity price.”

He further added, “The return ratios and operating margins have never been a concern from the long term perspective because this business again from an industrial capex and an auto-OEM perspective is mainly going to the organized players and SKF here again is the leader. So one clearly has to see what topline growth that is possible in this company for the next 2-3 years and also for the industry.”

“With an 18-20% topline possibility this company is just available at 11-12 times one year forward earnings. It immediately qualifies to be a buy because the PE again is at the historically lower levels. One can expect a 30% kind of upside even after the rally that one has seen in the last one month or so.”

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