SCHAEFFLER - Schaeffler India Limited Share Price

In the Q1 CY26 earnings conference call, Schaeffler India Limited's management provided a robust outlook, emphasizing resilience in the domestic economy and the company's strategic focus on growth. Mr. Harsha Kadam, CEO, highlighted an expected steady demand trajectory, particularly in the automotive sector, which is anticipated to continue its growth in line with production increases.

Key forward-looking points include:

1. Revenue Growth: The company recorded a revenue of INR 2,507 crores, marking an 18.8% increase year-on-year. While there was a 5.1% drop from Q4 2025, management remains optimistic about sustained revenue growth for the year.

2. Profitability: EBITDA for the quarter was INR 483 crores, maintaining a margin of 19%, with profit after tax increasing to INR 319.7 crores, up by 12.8% year-on-year.

3. Automotive Segment: The automotive technology segment saw incredible growth at 31% compared to underlying automotive production growth of 15%. Management credits the expansion of wallet share per vehicle and diversification of product offerings across various fuel technologies.

4. Exports Performance: Exports surged by 32.5% year-on-year, with management now projecting a full-year growth of 10% to 12%, up from previous conservative estimates of 5% to 10%.

5. Calibrated Capex: Capex for 2026 is expected to range between INR 400 crores to INR 500 crores, reflecting a strategic moderation to align with market demand.

6. Localization Efforts: Localization levels have reached 80%, and management aims to continue enhancing local sourcing to improve competitiveness and mitigate reliance on imports.

7. Market Conditions: While supply chain challenges due to geopolitical tensions were acknowledged, management expressed confidence in ongoing crisis management efforts to maintain supply chain stability.

Overall, Schaeffler India's management showcased a strong commitment to meeting financial targets and adapting to market demands while addressing challenges in the current economic environment.

1. Question: "On the demand side, for the industrial space, can you indicate how do you see the outlook for CY 2026?"

   Answer: Despite strong headwinds from supply chain challenges, we initiated daily crisis management meetings to secure our operations. Moving forward, while uncertainties exist, I'm confident in our ability to meet our delivery commitments. Our team is fully aware of the situation, and we remain optimistic that we can sustain our performance throughout the year.

2. Question: "On the Automotive Technology side, we've had extremely strong growth at 31%. What specific drivers are helping you in this outperformance?"

   Answer: The automotive sector has shown impressive growth, particularly in ICE, hybrid, and e-mobility applications. Our diverse portfolio allows us to capture robust demand across various platforms. We expect continued strength in automotive demand, making us optimistic for the rest of the year.

3. Question: "How do you see the export outlook, especially given current geopolitical issues?"

   Answer: We initially projected moderate export growth, but we achieved over 30% growth year-on-year. For the full year, we expect to maintain growth around 10-12%. This positive trend is supported by strong order books and effective ramp-up efforts in our key regions.

4. Question: "With increases in commodity costs, how can cost pressures be mitigated?"

   Answer: Rising costs due to West Asia's geopolitical situation have impacted our input costs, particularly fuel. We've explored alternate sourcing and stockpiling options and are in discussions about potentially compensating customers for these increased costs. However, impacts will take time to assess.

5. Question: "What are the main challenges you're facing in the industrial bearings segment?"

   Answer: We've faced a combination of sluggish demand in the aftermarket due to liquidity issues and increased competitive intensity in localized production. Our local manufacturing efforts continue, but recalibrating our product and market mix is essential to maintain profitability.

6. Question: "What are your expectations for the overall export growth and strategy moving forward?"

   Answer: While we do not have a singular focus on export growth, the local demand will guide our production and export strategy. We aim to serve local markets first before addressing global demand, bolstered by improvements in our local capabilities.

7. Question: "Can you provide insights on your capex plans for 2026?"

   Answer: We plan to invest between INR 400 crores to INR 500 crores this year, aiming to pick up from our prior years. Despite having calibrated our capex slightly last year, we are committed to investing in growth to meet market demand.

8. Question: "Is there an integration plan with Vitesco, and what benefits can we expect?"

   Answer: Currently, we operate as separate entities in India. However, we can leverage their electronic capabilities. While benefits from this collaboration are expected in the e-mobility sector, significant integration is not scheduled at this time.

9. Question: "What is the localization percentage across your product lines, and what is its strategic importance?"

   Answer: Our overall localization rate is about 80%, though it's approximately 60% in the industrial sector. High localization is crucial to improve cost competitiveness and serve local demands effectively. We believe that while 100% localization is unrealistic, we can achieve significant levels.

10. Question: "Can you share your revenue and margin guidance for CY'27 and CY'28?"

    Answer: We do not provide formal revenue or margin guidance. However, we remain committed to delivering on our promises to stakeholders and will focus on sustained performance growth while navigating market conditions.