SKF India Ltd is Rated Hold by MarketsMOJO

Current Rating and Its Significance

On 01 October 2025, SKF India Ltd’s rating was revised to 'Hold' from a previous 'Sell' rating, accompanied by a notable increase in its Mojo Score from 40 to 60 points. This 'Hold' rating suggests that the stock is expected to perform in line with the broader market and that investors should maintain their current positions without aggressive buying or selling. It reflects a balanced view of the company’s prospects, indicating neither strong bullish nor bearish signals at this time.

Here’s How SKF India Ltd Looks Today

As of 12 February 2026, SKF India Ltd presents a mixed but cautiously optimistic picture. The company operates within the Industrial Products sector and is classified as a small-cap stock. Despite recent volatility, the stock has delivered impressive returns over the past year, with a 1-year return of +123.26%, significantly outperforming the BSE500 benchmark return of 12.73% over the same period. However, shorter-term performance has been more subdued, with a 1-month decline of -4.95% and a year-to-date drop of -5.72%.

Quality Assessment

SKF India Ltd’s quality grade is rated as 'good', reflecting strong management efficiency and operational metrics. The company boasts a high return on equity (ROE) of 21.98%, signalling effective utilisation of shareholder capital. Additionally, the firm maintains a low debt-to-equity ratio, averaging zero, which indicates a conservative capital structure and limited financial risk. These factors contribute positively to the company’s overall quality profile, reassuring investors about its operational soundness.

Valuation Perspective

The valuation grade for SKF India Ltd is considered 'very attractive'. The stock trades at a price-to-book (P/B) ratio of 3.2, which is discounted relative to its peers’ historical valuations. This suggests that the market may be undervaluing the company’s assets and future earnings potential. Despite the strong stock price appreciation over the past year, the company’s profits have declined by approximately 4.2%, resulting in a low price/earnings-to-growth (PEG) ratio of 0.1. This combination of high returns and modest profit growth supports the view that the stock remains reasonably priced for investors seeking value.

Financial Trend Analysis

Financially, SKF India Ltd faces some challenges, reflected in its 'negative' financial grade. The company has experienced poor long-term growth, with net sales and operating profit increasing at annual rates of just 5.97% and 5.94% respectively over the last five years. Moreover, the firm has reported negative results for three consecutive quarters, with the latest quarterly profit after tax (PAT) falling by 50.2% to ₹69.25 crores compared to the previous four-quarter average. The return on capital employed (ROCE) for the half-year stands at a low 27.18%, and the debtors turnover ratio has declined to 5.31 times, indicating potential issues in working capital management. These trends warrant caution and justify the 'Hold' rating, as the company’s financial momentum is currently subdued.

Technical Outlook

From a technical standpoint, SKF India Ltd is rated as 'mildly bullish'. While the stock has experienced some recent pullbacks, the overall trend remains positive, supported by strong institutional holdings of 33.76%. Institutional investors typically have greater resources and expertise to analyse company fundamentals, and their significant stake suggests confidence in the stock’s medium-term prospects. The technical grade indicates that while the stock is not in a strong uptrend, it retains potential for further gains, aligning with the 'Hold' recommendation.

Summary for Investors

In summary, SKF India Ltd’s 'Hold' rating reflects a balanced assessment of its current strengths and weaknesses. The company’s high-quality management and attractive valuation are offset by recent financial headwinds and modest growth trends. Investors should view this rating as a signal to maintain existing positions while monitoring upcoming quarterly results and market developments closely. The stock’s strong one-year returns and institutional backing provide a cushion, but caution is advised given the recent earnings volatility.

Market Performance and Peer Comparison

SKF India Ltd’s market-beating performance over the past year, with returns exceeding 123%, stands out in the Industrial Products sector. This is particularly notable given the broader market’s more modest gains. However, the company’s slower growth in net sales and operating profit compared to sector averages suggests that the stock’s price appreciation may be driven more by market sentiment and technical factors than by fundamental earnings growth. Investors should weigh these factors carefully when considering new investments or portfolio adjustments.

Institutional Confidence and Risk Considerations

The high institutional holding of 33.76% is a positive indicator, reflecting confidence from sophisticated investors who typically conduct thorough due diligence. This level of ownership can provide stability to the stock price and reduce volatility. Nonetheless, the recent negative quarterly earnings and declining financial ratios highlight risks that investors must consider. The company’s ability to reverse these trends and sustain growth will be critical in determining its future trajectory.

Conclusion

SKF India Ltd’s 'Hold' rating by MarketsMOJO, last updated on 01 October 2025, remains appropriate given the current financial and market conditions as of 12 February 2026. The stock offers a blend of quality management, attractive valuation, and technical support, balanced against financial challenges and earnings volatility. Investors are advised to maintain a watchful stance, recognising the stock’s potential for steady returns while remaining mindful of the risks inherent in its recent performance.

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