SKF India plans ₹500 cr annual capex to pivot away from demerged entity
Management targets 11-12% margins after a contraction to 12.3%, as the firm builds new capacity to replace goods previously sourced from its industrial unit.
— 1 earlier story on SKF India Ltd. →What's new
- Revenue rose 12.8% to ₹2,030 crore, fueled by a 20% jump in OEM sales.
- PBT margins slipped to 12.3% on aftermarket discounting and mix shifts.
- New Ahmedabad capacity is slated to come online by the end of 2027.
Why this matters
The company is spending to replace supply chains lost in the demerger. While OEM growth is strong, the margin pressure in the aftermarket suggests a competitive environment that management is still working to stabilize.
What we're watching
- Whether the 11-12% margin guidance holds as new capacity comes online.
- The pace of reducing reliance on traded goods from the demerged entity.
- Market share retention in the aftermarket amid current discounting.
The full read
SKF India is committing ₹500 crore annually over the next two years to build internal capacity, a direct response to the recent demerger of its industrial unit. The company reported full-year revenue of ₹2,030 crore, a 12.8% increase, buoyed by a 20% surge in OEM sales. However, the bottom line shows the strain of the transition; profit before tax margins contracted to 12.3% as the firm faced discounting pressure in the aftermarket. Management now targets a near-term margin range of 11-12%. The core challenge is replacing goods previously sourced from the demerged entity, with new Ahmedabad production lines not expected to go live until the end of 2027. The company is trading current profitability for long-term supply chain independence, making the next few quarters a test of whether it can maintain OEM momentum while stabilizing aftermarket margins.
Questions answered
- What drove the revenue growth for the full year?
- Revenue grew 12.8% to ₹2,030 crore, primarily supported by a 20% increase in sales to original equipment manufacturers (OEMs).
- Why did profit margins contract?
- Profit before tax margins fell to 12.3% because of a shift in product mix and aggressive discounting within the aftermarket segment.
- What is the company's plan for capital expenditure?
- SKF India plans to invest ₹500 crore annually over the next two years to build new capacity and decrease its dependence on goods traded from the demerged industrial unit.
- When will the new production lines be operational?
- The company expects new product lines at its Ahmedabad facility to be operational by the end of calendar 2027.
- What is the management's outlook for margins?
- Management has guided for near-term profit before tax margins to settle in the 11-12% range.
Story so far
All notes on SKFINDIA →- 27 May 2026 · 1:05 PM IST SKF India plans ₹500 cr annual capex to pivot away from demerged entity
- 1d ago SKF India targets ₹200 cr capex to cut reliance on traded goods