Don’t Trade in the Dark—Get Your Pre-Market Report Every Day.Join Now
Schaeffler India Ltd
| Q4 CY25 Earnings Call
Summary : Schaeffler India delivered strong Q4 CY25 results driven by robust automotive and industrial demand, new business wins, and strategic localization efforts, maintaining a positive outlook despite moderating export growth.
Management Perspective positive : Management consistently highlighted strong financial performance, new business wins, high capacity utilization, and a clear growth strategy. They expressed pride in awards, ESG ranking, and confidence in future growth.
Concall Report Analysis & Insights
Business Overview
- Schaeffler India reported Q4 CY25 revenue of INR 2,643 crores, up 26.9% YoY and 12% QoQ.
- Annual turnover reached INR 9,395 crores, with EBITDA at 19.6% and PAT at 12.7%.
- The company achieved strong free cash flow generation of INR 254 crores in Q4.
- Received multiple customer awards for quality, supply chain, and on-time deliveries.
- Recognized for CSR initiatives, including women skill development and water conservation.
Future Growth Prospects
- Secured new business wins in passenger vehicle clutches, dual mass flywheels, and hydraulic cam phases.
- Expanding product portfolio for Bharat VI vehicle repairs and industrial applications.
- Investing in localization, reaching 78% content, with focus on spherical roller bearings.
- Scaling up capex to over INR 500 crores in 2026 to support sustained double-digit growth.
- Strong e-mobility growth from e-Axle projects and new Battery Management System wins.
Management Insights
- Management attributes growth to continuous preparedness and new business acquisitions.
- Emphasizes strong focus on free cash flow generation and capital efficiency.
- Committed to sustained double-digit growth and continued capacity investments.
- Prioritizing localization of products specific to Indian market needs.
- Focused on balancing channel and product mix for KRSV to improve financial parameters.
Signs of Skepticism
- KRSV's losses widened in Q4, despite management stating it's 'in line with our plan'.
- Export growth is expected to moderate significantly from 35% to 5-10% in 2026.
- Specific revenue potential for the relocated clutch line was not disclosed.
Risk Factors
- Increased competitive intensity noted in industrial bearing segments.
- Export growth momentum is projected to moderate to 5-10% in 2026.
- KRSV (Koovers) subsidiary reported widening losses in Q4, though a breakeven plan is in place.
- Timing issues for project-based businesses like wind and railways can cause quarterly fluctuations.
Good To Know
- India's GDP growth reflects domestic demand, structural reforms, and global supply chain role.
- Inflation was significantly lower in 2025, with Q4 recording 0.8%.
- GST 2.0 reform boosted the automobile industry and simplified compliance.
- Recommended a dividend payout of INR 35 per share, within target ratio.
- Ranked first in India and seventh globally in S&P Dow Jones Sustainability Index.
Key Drivers
- Strong Q4 revenue and profit growth.
- New business wins in automotive and industrial.
- Increased localization and capacity utilization.
- Positive outlook for hybrid and EV segments.
Key Analyst Discussions
Competitive Environment
- Acknowledges existing competition, particularly in industrial bearings (SRB, CRB).
- Focus remains on internal growth strategy and increasing localization content.
- Vitesco integration positions Schaeffler as a single brand with enhanced offerings.
Market Trends & Consumer Behavior
- Automotive sector saw strong growth across 2-wheelers, passenger, commercial vehicles, and tractors.
- Industrial sectors like cement and steel showed robust growth in Q4.
- OEMs are showing increased interest and traction in hybrid vehicle technology.
- Market demand had positive traction, which the company leveraged.
Financial Highlights
- Other expenses increased by INR 72 crores QoQ due to services and cost true-ups.
- Capex was moderated in 2025 to focus on utilization and capital efficiency.
- Capex will scale up to over INR 500 crores in 2026, in line with growth plans.
- Working capital as a percentage to sales improved to 17.9% in Q4.
Product Composition
- Hybrid technology offers higher content per vehicle due to module/subsystem delivery.
- e-Axle project exceeded 2025 projections, with further localization planned.
- Strong growth observed in both e-mobility and ICE engine applications.
- Wind business is considered domestic sales, not exports, and grew significantly.
Strategic Considerations
- Vitesco integration is complete, leading to new business wins in Battery Management Systems.
- Localization strategy continues, reaching 78% content, especially for spherical roller bearings.
- India-EU FTA could benefit raw material imports, prompting a review of localization strategy.
- Capacity utilization is over 85%, with productivity improvements allowing further absorption.