Swedish automotive and industrial component firm SKF AB’s commitment to growing its Indian operations has caught the attention of investors. Even as the Sensex closed 1.5% lower on Thursday, SKF India Ltd’s shares rose by around 2% to close at Rs391 each.

SKF India’s new Haridwar facility will cater to the two-wheeler OE (original equipment) segment and the after market. Globally, the group also has a stronghold in the bearings and other components used in drilling rigs and wind turbines. SKF India’s Ahmedabad facility will enhance focus on this segment.

While the parent company’s revenues were down nearly 12% in 2009 from the previous year, SKF India registered only a marginal decline. Again, while the parent company’s profit margin dropped from around 13% in 2008 to 6% in 2009, SKF India’s margin fell to a lesser degree, from 12% to 10%. The parent has indicated a long-term target of improvement in profit margin to 12% at the global level.

SKF India registered earnings of around Rs17 per share during 2009. At the current market price of Rs371, historic earnings are discounted 23 times.

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