Timken India shares skid 11% amid reports on block deal

Shares of Timken India slumped as much as 11.04% to hit an intraday low of ₹3,100 apiece on the Bombay Stock Exchange (BSE), amid reports that the promoter company Singapore-based Timken Group has sold up to 8.4% stake or 63 lakh shares in the company for 1,890 crores via a block deal. 

The scrip opened lower at ₹3,198 on Tuesday against the closing price of the previous session at ₹3,485.50. At the time of reporting, shares of Timken India were trading 7.27% lower at ₹3,231. At the current price, shares of Timken India are trading 14% lower than the 52-week high of ₹3,760.80, which the company touched on November 21 last year. The share price of Timken India is trading 43.7% higher than the 52-week low of ₹2,245.10 which the company touched on June 22 last year. During the session, the company’s market capitalisation stood at ₹24,318.22 crore, with a whopping 89,93,909 shares at the tune of ₹2,780 crore exchanging hands on the BSE against the two-week average of 2,097 shares. Similarly, as many as 39,76,004 equity shares amounting to more than ₹1,270.8 crore shares were being traded on the NSE.

The promoter group has reportedly fixed the floor at 3,000 per share, which is a 14% discount to the previous closing price of ₹3,485.50. As of March 31, 2023, Timken Group owned a 67.8% stake in its Indian subsidiary. BofA Securities is reportedly the sole book-runner for the transaction.

In the March quarter of FY24, Timken India's revenue from operations surged 20% year-on-year (YoY) to ₹802.5 crore. Its profit after tax, however, plunged 14% to ₹104.51 crore. The company’s EBITDA (earnings before interest, tax, depreciation and amortisation) declined by 15% YoY owing to the contraction in its margins.  

Incorporated in 1987, Timken India offers friction management solutions that maximise performance, fuel efficiency and equipment life.  The company manufactures and distributes tapered roller bearings, components and accessories for automobiles and railways and also provides maintenance services and refurbishment services for the same. Timken India, which was previously known as Tata Timken India was a joint venture between Tata Iron and Steel Company (TISCO) and Timken Group.

Timken India commenced commercial production at its Jamshedpur plant in March 1992. TISCO and TIMKEN each held a 40% equity stake in the company and the public held the rest. In 1999, Timken acquired from Tata Steel its 40% stake in Tata Timken Limited. The name of the Company was changed to Timken India Limited on July 2, 1999. 

Following the development, brokerage firms have revised the target price of Timken India. JM Financials has maintained a ‘BUY’ rating with a target price of ₹3,379, whereas Kotak Institutional Equities has a ‘SELL’ rating with a target price of ₹2,500 on Timken India’s stock. 

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