SKF India Ltd., unit of the world’s largest maker of ball bearings, expects profit to rise for the first time in three years as demand for cars and motorcycles surge in the South Asian nation.
Net income may rise 12 percent this year, Managing Director Shishir Joshipura said. The company’s profit fell 26 percent last year and 21 percent in 2008. Profit tripled to 436 million rupees ($9.5 million) in the first quarter, the company said in a statement to the Bombay Stock Exchange on April 23.
Rising salaries and accelerating growth in Asia’s third- largest economy is boosting demand for cars made by Suzuki Motor Corp. and Toyota Motor Corp. adding to sales at automobile component makers including SKF. The $1.2 trillion economy may expand at between 9 percent and 10 percent annually in the coming years, Chakravarthy Rangarajan, chairman of the Prime Minister’s Economic Advisory Council, said on June 17.
“If the current trend remains, then we should be able” to meet our targets, Joshipura said in a phone interview today.
SKF’s shares have risen 36 percent in dollar terms in the past three months making it the best-performing stock in the Bloomberg Asia Pacific Metal Fabricate/Hardware Index. They rose 0.5 percent to 481.95 rupees in Mumbai at 12:20 p.m.
The company which gets 45 percent of its revenue from the automobile industry, expects sales to rise 20 percent this year, Joshipura said. SKF, based in Mumbai, gets the balance from selling ball bearings to factories. Industrial production grew 17.6 percent in April, just short of the 17.7 percent expansion achieved in December, the biggest increase since at least 1994.
“This year will be one of the best for the company in terms of growth,” said Umesh Karne, an analyst at BRICS Securities Ltd. who recommends investors “buy” the shares.
SKF plans to expand capacity at its Pune and Bangalore factories “in the beginning of next year,” Joshipura said without elaborating. The company is 53.58 percent owned by SKF Group, according to the data on Bombay Stock Exchange’s website.
--Editors: Arijit Ghosh, Sam Nagarajan.
To contact the reporter on this story: Hemal Savai in Mumbai at at hsavai@bloomberg.net.
To contact the editor responsible for this story: Arijit Ghosh at at aghosh@bloomberg.net
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