SCHAEFFLER - Schaeffler India Limited Share Price

In the recent earnings call for Q4 CY25, Schaeffler India Limited's management provided an optimistic outlook, emphasizing strong growth prospects supported by favorable economic indicators and robust performance in key sectors. The company reported a revenue of INR 2,643 crores for Q4, marking a 26.9% year-over-year increase and a 12% rise from the previous quarter. EBITDA stood at INR 505.6 crores with an EBITDA margin of 19.1%. The profit after tax was reported at INR 328 crores.

Management highlighted positive trends in the automotive sector, noting significant growth: 2-wheelers at 8.6%, passenger vehicles at 8%, and commercial vehicles rebounding with an 8.4% increase. Notably, exports experienced a remarkable 58% growth in commercial vehicles year-over-year.

Looking ahead, management expects strong continuation of double-digit growth, primarily due to strategic business wins, particularly in electric and hybrid technologies. Investments in capex are projected to exceed INR 500 crores in 2026, in line with plans to sustain and enhance production capacity. The company aims to maintain a strong market presence amid increasing competitive intensity.

Key forward-looking points include:

1. Revenue Growth: Aiming for sustained annualized revenue growth exceeding previous targets, driven by a robust order pipeline.
2. Capex Plans: Expected capex investment to increase to over INR 500 crores in 2026, aligning with market demands and production capacity improvements.
3. Localization: Continued focus on enhancing localization rates to 78% and expanding product offerings for hybrid and electric vehicles.
4. Market Dynamics: Anticipation of benefits from impending trade agreements, improving efficiencies and cost structures for imports and exports.
5. Sustainability Initiatives: Ongoing commitment to CSR and sustainability, highlighted by the recent recognition in ESG rankings.

Overall, management expressed confidence in achieving robust operational and financial results while navigating the evolving market landscape.

Q&A Section Summary from Schaeffler India Limited Q4 CY25 Earnings Transcript

Question 1: Mukesh Saraf from Avendus Spark:
"On the other expenses, this quarter, we've seen that rise to about INR 400 crores. Is there any lumpy item that you want to call out?"

Answer:
Yes, our other expenses increased by INR 72 crores in Q4. This was mainly due to certain services and true-up costs for which invoices from previous quarters arrived during this period. There are no one-off expenses; it's simply a timing issue with costs.

Question 2: Mukesh Saraf:
"Have you started seeing any increase in competitive intensity for segments like iron and steel, cement, etc.?"

Answer:
Competition is always present, especially with increased localization efforts. Our strategy focuses on enhancing our localization content, which recently reached 78%. We acknowledge competition but remain committed to our growth strategy.

Question 3: Mukesh Saraf:
"Have we started seeing benefits from hybrid powertrains?"

Answer:
Yes, we have commenced series production of hybrid components. Several projects are underway with customers undergoing homologation and validation. Both hybrids and electric vehicles are gaining traction; we expect sustained growth in both segments.

Question 4: Abhishek Ghosh from DSP Mutual Fund:
"Where are we on the Vitesco integration? Are benefits accruing?"

Answer:
We've completed the merger with Vitesco, and now we represent a single brand, Schaeffler. We are seeing new business wins, particularly in Battery Management Systems for electric vehicles, which are promising for our future offerings.

Question 5: Abhishek Ghosh:
"Regarding exports, can you detail the demand by region?"

Answer:
Our exports have been strong primarily in Europe and the Asia Pacific regions. We experienced a 4% growth in our wind business year-on-year and a 15% increase from the previous quarter, indicating healthy demand.

Question 6: Mahesh Bendre from LIC Mutual Fund:
"Will the pending EU trade agreement benefit us?"

Answer:
Yes, we expect benefits in the import duties for raw materials which currently range from 7.5% to 15%. However, specifics on new rates haven't been announced yet. Exports are less impacted as duties there are already low.

Question 7: Balasubramanian from Arihant Capital:
"Is the recent wind business growth just due to project delays?"

Answer:
The improvement is indeed due to project timing in wind and rail sectors. While there was slower growth, overall performance remained positive in power transmission and automation spaces.

Question 8: Raghunandhan N. L. from Nuvama Research:
"What is the expected capacity ramp-up at the Shoolagiri plant?"

Answer:
Capacity utilization is currently over 85%. This year, we invested around INR 375-400 crores, and we plan to increase it in 2026 in line with market needs and to support relevant new technologies.

Question 9: Harshit Patel from Equirus Securities:
"Will growth in Automotive Technology moderate? Will E-axle projects be significant?"

Answer:
Our E-axle projects are driving robust growth, and while we expect moderation, we are also seeing solid performance in internal combustion applications. Investment in capacity will continue to support sustained growth across both segments.

This summary encapsulates the key questions and answers from the earnings call in an engaging and illustrative manner, retaining essential information and metrics presented.