SCHAEFFLER - Schaeffler India Limited Share Price

In the recent earnings conference held on July 25, 2025, Schaeffler India Limited's management provided a positive outlook emphasizing sustained growth despite current market challenges.

Major Forward-Looking Points:

1. Revenue Growth: Schaeffler India reported a revenue of INR 2,282 crores for Q2 2025, marking an 8.2% increase over the previous quarter and a 10.1% increase year-on-year. The six-month revenue stood at INR 4,392 crores, reflecting a 12% growth compared to the same period last year.

2. EBITDA Performance: The EBITDA for the quarter was INR 449 crores, with an EBITDA margin of 19.7%, which improved from 19.3% in the preceding quarter. The profit after tax also saw a rise to INR 296 crores from INR 263 crores, indicating a 13% margin, bettering the previous 12.6%.

3. Free Cash Flow: Notably strong free cash flow generation was highlighted, at INR 287 crores for the quarter, improved from INR 237 crores in Q1 2025.

4. CAPEX Insights: Following the announcement of a planned investment by the parent company of €100 million annually from 2026, management stated that this year's CAPEX strategy focuses on capital efficiency, following significant investments made in recent years.

5. New Business Wins: The management shared that strong business acquisitions in automotive technologies, particularly in hydraulic lash adjusters and clutches, have contributed to the robust performance. The Vehicle Lifetime Solutions segment also showed increased demand for products like oils and wipers.

6. Localization and Efficiency: Localization rates improved to 78%, with ongoing efforts to enhance production capabilities further as demand increases.

7. Export Growth: Exports grew significantly, with a 23% increase in the first six months of 2025. The management is especially optimistic about Asia-Pacific markets and expects to sustain this momentum throughout the year.

Overall, the management reinforced their commitment to navigate market volatility effectively, focus on efficiency, and continue investments in expanding their operational capabilities.

1. Question: "Mr. Rosenfeld mentioned that the CAPEX or rather the investment in India is expected to be upwards of €100 million a year. Are we looking to increase our CAPEX targets?" Answer: "Mr. Rosenfeld announced an overall €500 million for the next five years, averaging about €100 million starting in 2026. This year's CAPEX plan remains intact as we focus on capital efficiency, having invested Rs.1,700 crores over the last three years. We will ramp up investments again starting next year, depending on market conditions."

2. Question: "Could you provide an outlook on exports given the strong growth?" Answer: "Our order book is secured, so we anticipate sustaining our export growth for this year. However, geopolitical factors in Europe and the Americas will influence next year's performance. We're also focusing on increasing our exports to the Asia Pacific."

3. Question: "The Bearings and Industrial Solutions business seems to have flattened out this quarter after previous growth. Should we read into that?" Answer: "While the overall numbers are tempered, we've done well in sectors like railways and wind energy. Their performance has been strong, but we noticed a slowdown in two-wheelers which affected overall growth. Our distribution also performed satisfactorily."

4. Question: "On Vehicle Lifetime Solutions, what are your efforts for market share gains?" Answer: "We've seen increased OES demand from OEMs, indicating aftermarket growth. Our newly launched traded goods like oils and wiper blades saw robust upticks. Additionally, we efficiently utilized our production capacities to cater to the aftermarket, especially in clutches."

5. Question: "Could you clarify why other expenses are notably higher?" Answer: "The increase is primarily due to one-time expenses related to the new plant, including tooling costs and operating supplies. Non-operating income also rose as we supported group companies on specific projects."

6. Question: "What is the sustainable rate for other expenses going forward?" Answer: "We managed overall expenses within our usual range. We expect to absorb fixed costs effectively due to anticipated double-digit growth, so we foresee no further issues in the coming quarters."

7. Question: "What is the annual revenue potential for the e-axle project, considering a lifetime order size of €300 million?" Answer: "While it's challenging to provide exact revenue figures now, we are closely monitoring how the vehicle performs post-launch to gauge revenue potential. For now, our primary focus remains on the Indian market as it develops."

8. Question: "On localization, what is the current share and can you achieve 80% by the end of 2025?" Answer: "We've increased localization rates to 78% this quarter. With current demand trends, we absolutely aim to reach 80% in the next one or two years, as it is essential for competitiveness in India."

9. Question: "Can you comment on capacity utilization across plants?" Answer: "Currently, our overall capacity utilization is around 85% with many plants operating above that level. This includes our newer facilities, indicating strong operational efficiency."

10. Question: "What is the significance of localization for wind turbine components for the domestic bearing industry?" Answer: "Some of the wind bearings are imported due to our production limitations. However, we've localized over 27 types this past year and continue to invest in expanding our capabilities to reduce imports in this segment."