Timken India Ltd. - Margin uptick from Bharuch plant ramp-up priced in - Company Update

Timken India has reported revenue growth of 15% YOY and 22.2% EBITDA margin in Q4FY26, thanks to sharp acceleration in export growth. However, we believe that the margins in exports have peaked out. Further, Timken India’s Bharuch plant ramp-up is slower than expected and it is targeted to reach 70% capacity utilization by 2QFY27. In addition, the railway business is expected to report mere high single digit growth, going forward.  Ramp-up in process segment is also warranted given ramp-up in CRB/SRB segment. Nonetheless, the Management highlighted that demand in CV/tractor market remains robust. The Board has approved the merger of Timken GGB Technology Private Limited (a wholly owned subsidiary) with Timken India Limited. The company stated this will help drive operational synergies, improve effectiveness and reduce overall costs. We believe Timken India’s has disappointed on new Bharuch plant ramp-up and current stock price already reflects margin uptick from its full utilization as there is minimal incremental sales from this plant. We re-initiate coverage with REDUCE rating on the stock with a target price of Rs 3,293 (40x FY28 EPS).

4QFY26 result summary:

Revenues increased by 14.6% yoy due to (1) double-digit yoy increase in exports CV and process industries segments and (2) high single-digit growth in CVs offset by marginal decline in the railway segment. Timken India reported 4QFY26 standalone EBITDA of Rs 2.4bn (+12.7% yoy and +129% qoq) due to (1) better-than-expected revenue print and (2) 410 bps qoq improvement in gross margins, partly offset by 140bps increase in other expenses. Consequently, EBITDA margin came in at 22.2% (-40 bps yoy) Net profit came at Rs 1.6bn (-17% yoy).

Bharuch plant ramp-up is slower than expected:

Bharuch plant is now fully capitalized across all lines and is in the ramp-up phase. FY2026 full-year revenue from the plant was Rs 800mn, with 4QFY26 contributing Rs 600mn (versus Rs 120mn in 3QFY26). Plant is yet to break-even, as per the management. The company expects utilization to cross 70% by July 2026 (peak revenue potential of Rs 7bn). We understand that the plant will bring minimal additional sales. It will replace the existing sale of traded goods and import of SRB/CRB from its overseas entities or domestic unlisted entities.

Railway business continues to see slow and steady growth:

Timken India indicated that the railways business is expected to witness slow and steady growth, supported by opportunities from India’s high-speed rail network and dedicated freight corridor projects, with management guiding for high single-digit growth in the segment. The company also shared progress on its new rail manufacturing facility at Jamshedpur, involving a capex of Rs1.2 bn, where machinery is being shipped from Europe, the plant. Management expects the first rail bearing to be produced by November 2026, followed by commercial production from December 2026. However, we believe the sharp export recovery seen in the last quarter may be temporary and may not translate into sustainable margins going forward. In our view, management’s outlook on both railways and exports appears relatively optimistic.

Valuation, risk and Rating:

We have valued Timken India at 40.0x P/E on March 2028E estimates to arrive at a TP of Rs3,293. We believe the current valuation is rich at 45x FY28e. It is trading significantly above its 10-year average forward PE multiple of 38x. Key risks to our rating: Faster than expected ramp-up in Bharuch plant and improved capex for railways

Company website: https://www.timken.com/

*CMP is as per report published date

Click to download the full Timken India Ltd. Q4FY26 Company Update

Analyst:

• Mayank Bhandari - Research Analyst, Institutional Equities (NISM-202300189123)

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FAQs on Timken India Ltd. Q4FY26 Company Update

1. What supported Timken India’s Q4FY26 growth?

Strong export growth along with healthy demand from commercial vehicles and industrial segments supported revenue growth during the quarter.

2. Why is the Bharuch plant important for Timken India?

The Bharuch plant is expected to improve operational efficiency and reduce dependence on imports, though utilization ramp-up has been slower than expected.

3. What is the outlook for Timken India’s railway business?

The company expects stable high single-digit growth driven by dedicated freight corridors and high-speed rail opportunities in India.

4. Why has the stock been assigned a REDUCE rating?

Current valuations already factor in expected margin improvements, while slower plant ramp-up and uncertainty in export margins limit upside potential.

5. What are the key risks for Timken India?

Key risks include faster-than-expected Bharuch plant utilization, stronger railway capex and sustained export demand recovery.

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