Schaeffler India

Schaeffler India reported a robust Q2 CY25 with revenue reaching ₹2,282 crores, marking a 10.1% year-on-year and 8.2% quarter-on-quarter growth. EBITDA stood at ₹449 crores, translating to a 19.7% margin, an improvement from 19.3% in the preceding quarter. Profit After Tax was ₹296 crores, representing a 13% margin, up 17% YoY. This performance was achieved despite a challenging market, including a stagnant automotive production and an estimated GDP growth of 6.5%, a drop from the previous quarter.

The company continues its strategic investments, with CAPEX for the quarter at ₹100 crores. A significant milestone was the inauguration of its fifth manufacturing facility in Bangalore for clutch, drivetrain, and powertrain applications, with plans for 3x expansion. Schaeffler India also commenced series supplies of e-axles for the Tata Harrier platform from its Talegaon plant, with further localization planned. The localization rate increased to 78-79% in Q2 CY25, up from 75-76% previously, indicating efficient utilization of domestic capacities.

Growth was broad-based, with 6-month period exports growing 23% YoY, Automotive Technologies by 13.5%, and Vehicle Lifetime Solutions by 12.3%. The business mix saw Bearings and Industrial Solutions at ~40%, Automotive Technologies at 30%, Exports at ~16%, and Vehicle Lifetime Solutions at 13%. While the passenger car segment faced challenges, agricultural tractors showed strong traction, and specific industrial sectors like railways and wind energy performed well.

Schaeffler India generated a strong free cash flow of ₹287 crores in the quarter, a significant improvement from ₹237 crores in the preceding quarter and a negative FCF in the same period last year. This was attributed to a clear focus on cash generation and better working capital management. The company emphasized its sustained commitment to quality, timely deliveries, and customer-centricity, which earned it multiple awards from prestigious customers like Toyota, Honda, and Alstom.

KRSV Innovations (Koovers) contributed ₹71 crores in revenue but continued to operate at negative margins (15% EBITDA, 16.8% EBIT), which remains a key focus area for improvement. Regarding future CAPEX, the Schaeffler Group CEO's announcement of €500 million over five years until 2030 for India translates to an average of €100 million annually from 2026. Management indicated that while this year's CAPEX plan is intact with a focus on capital efficiency, future ramp-ups will be agile and dependent on market developments.

The company highlighted its robust R&D infrastructure for gasoline engines, hybrid technology, and e-mobility in India, supported by its German headquarters. For e-mobility, the focus is on leveraging and growing the business in the Indian market, with e-axle supplies for the Tata Harrier being a key initiative. While the lifetime order for e-axles is €300 million, management noted that the annual revenue run rate is challenging to predict due to its dependence on the vehicle's market performance.