Schaeffler India Limited — Q1 FY26 earnings call

Call held 25 Jul 2025

Management summary

Schaeffler India Limited delivered a strong Q2 CY25, with revenue growing to ₹2,282 crores and EBITDA margin expanding to 19.7%. Profit after tax also saw healthy growth, and the company generated robust free cash flow. Strategic investments in e-mobility and localization efforts continued, while challenges in Koovers' margins and a volatile market environment remain areas of focus.

Highlights

  • Revenue grew to ₹2,282 crores, marking an 8.2% QoQ and 10.1% YoY increase, demonstrating robust sales performance.

  • EBITDA margin expanded to 19.7% (₹449 crores), reflecting improved operational efficiency and quality of earnings.

  • PAT reached ₹296 crores (13% margin), growing 11.6% QoQ and 17% YoY, indicating strong bottom-line performance.

  • Generated ₹287 crores in free cash flow, a significant improvement from a negative cash flow situation in the same period last year.

  • Localization rate improved to 78-79%, and overall capacity utilization is high, close to 85%.

Concerns

  • Koovers (KRSV Innovations Auto Solutions Limited) reported negative margins with EBITDA at -15% and EBIT at -16.8%, identified as a key focus area for improvement.

  • The overall market ecosystem remains challenging and volatile, requiring agile CAPEX management.

  • Geopolitical situation in Europe and Americas could impact export performance in the next year.

Key financials

  1. Revenue ₹2,282 Cr +10.1%YoY
  2. EBITDA ₹449 Cr +16.6%YoY
  3. EBITDA Margin 19.7%
  4. PAT ₹296 Cr +17%YoY
  5. PAT Margin 13%
  6. Free Cash Flow ₹287 Cr

What they filed

Q1 FY27: revenue up 17.5%, net profit up 13.9% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue2,073 2,082 2,110 2,282 2,360 +14%2,643 +27%2,507 +19%2,681 +17%
EBITDA375 378 401 431 467 +25%489 +29%468 +17%502 +16%
Net profit247 249 265 296 307 +24%328 +32%320 +21%337 +14%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Bearings and Industrial Solutions
    40% Sales Mix
  • Automotive Technologies
    30% Sales Mix
  • Exports
    16% Sales Mix
  • Vehicle Lifetime Solutions
    13% Sales Mix
  • KRSV Innovations Auto Solutions Limited (Koovers)
    ₹71 Cr Revenue-15% EBITDA-16.8% EBIT
  • Consolidated
    18.7% EBITDA15.1% EBIT

Order book

high confidence

Total value

EUR 300 Mn

as of 2025-06-30 quantified

Execution

depends on vehicle performance in market

The company has a projected lifetime order of €300 million for its e-axle component, with ramp-up dependent on the market performance of the vehicle it supplies.

Source: Q&A

Capital allocation

high confidence
  • Capex ₹100 Cr this quarter · ₹1,000 Cr (CY26) planned
    • New manufacturing facility for clutch and drivetrain applications
    • E-axle production line expansion (Phase 2)
    • Shoolagiri plant (current year spend) ₹40 Cr
    So, with that, if you look at the quarter in terms of CAPEX, our investments stood at INR. 100 crores as against the preceding quarter. We are still better at INR. 82 crores, which was in Q1. However, compared to last year, we have moderated a bit, but this is not to say that our CAPEX commitments are going to go down. It is just that we are aligning our spend, our investments in tune with how the market is shaping up. And this is where agility and also the prudent management of capital flow becomes super important.
  • Liquidity Liquidity disclosed The company generated a free cash flow of INR 287 crores in the quarter, a significant improvement from a negative cash flow situation in the same period last year.
    Our best performance has been in free cash flow generation. In the quarter, we were able to generate a free cash flow, INR. 287 crores, unlike the preceding quarter with INR. 237 crores compared to the same period last year where we were in a negative cash flow situation.

Guidance & targets

Capex

  • Annual Capex Capex · from CY26 onwards · High confidence ₹1,000 crores
    So, next year onwards, it can be in the INR. 1,000 crores a year kind of ballpark based on that €500 million number that you mentioned for 5-year period.

    — Hardevi Vazirani

Localization

  • Localization Rate Localization · ongoing · High confidence 78-79%

    From 75-76% today

    So, currently, we are in that range of 78% -79%. And we will continue to keep that focus because the localization is definitely one of the important prerequisites to compete in the Indian market, yes. So, that will continue to remain.

    — Harsha Kadam

Capacity

  • Capacity Utilization Capacity · ongoing · High confidence above 80%
    So, our capacity utilization is currently close to 85%. There are different capacity utilization at different plants, but all are above 80%.

    — Hardevi Vazirani

Exports

  • Export Pattern Exports · this year · Medium confidence sustain current pattern
    So, at this point of time, as it looks based on the order book that we will be able to sustain the pattern that we have so far, at least this year.

    — Hardevi Vazirani

What to watch in Q2 FY26

Annual CAPEX for CY26

CY26
Current ₹100 crores (Q2 CY25 spend)
Target ₹1,000 crores

Why it matters

To verify the company's commitment to significant capacity expansion and strategic investments as guided.

So, next year onwards, it can be in the INR. 1,000 crores a year kind of ballpark based on that €500 million number that you mentioned for 5-year period.

Risks & concerns

  • Challenging and volatile market ecosystem

    medium

    The company operates in a challenging and volatile market situation, requiring agile CAPEX investments.

    Management acknowledged

  • Negative margins in Koovers business

    medium

    Koovers reported negative EBITDA (-15%) and EBIT (-16.8%) margins, which is a key focus area for improvement.

    Management acknowledged

  • Geopolitical situation impacting exports

    medium

    The geopolitical situation and market conditions in Europe and Americas could impact export performance in the next year.

    Management acknowledged

Q&A highlights

3 direct, 4 evasive
Shoolagiri plant revenue potential Evasive
I am afraid, I mean, we don't link necessarily every plant-wise revenue performance because there are interdependencies, there are processes which are done by one plant for the other plant. So, at this point of time, at least we will not be disclosing on the revenue potential for Shoolagiri.

Management declined to provide specific revenue potential for the Shoolagiri plant, citing interdependencies and non-disclosure.

Asked by Raghunandan

CAPEX allocation for hybrid and EV components Evasive
We talked about the Tata Motors Harrier e-Axle because they have officially gone public on it, and we were given the permissions to talk about it, whereas for those projects which we are working on, I am afraid we are bound by the NDA.

Management could not disclose specific CAPEX allocation for hybrid/EV components or details on other OEM projects due to NDAs, limiting visibility into future growth drivers.

Asked by Balasubramanian

E-axle potential content per vehicle Evasive
Well, as I said earlier, these are things I am not at liberty to disclose now because of the NDAS we have in place.

Management declined to provide details on the potential content per vehicle for the e-axle product due to non-disclosure agreements, hindering understanding of its financial impact.

Asked by Rishi Vora

Shoolagiri asset turnover Evasive
This is a part that currently we cannot disclose.

Management refused to disclose the expected asset turnover from the Shoolagiri plant, making it difficult to assess the efficiency of this new investment.

Asked by Mayank Bhandari

CAPEX guidance for Schaeffler India Direct
So, next year onwards, it can be in the INR. 1,000 crores a year kind of ballpark based on that €500 million number that you mentioned for 5-year period.

Clarified that the Schaeffler Group's €500 million CAPEX plan translates to approximately ₹1,000 crores per year for Schaeffler India from CY26 onwards, providing clear forward guidance.

Asked by Mukesh Saraf

Content per vehicle for CVs/LCVs and EVs Partial
Yes, our content per vehicle there was somewhere in the range of €50 to €60. Actually, we were lower. In commercial vehicles, we have started to increase our offerings there. LCVs in particular, we have been doing well. So, I must say we should definitely be in the range of €60 to €65 plus.

Management provided an updated range for content per vehicle in CVs/LCVs (€60-€65+), but noted they haven't measured EV content yet due to insufficient volume.

Asked by Harshit Patel

R&D investments for ICE vs EV technologies Direct
So, that said, we continue to invest and we will continue to invest in the gasoline sector. Why am I saying that? Because in India, we definitely still see some CAGR growth happening year after year. And so it is pertinent that we continue to leverage the growth that we see in the gasoline segment, yes, to stay relevant in the market.

Management confirmed continued R&D investment in both ICE (gasoline sector) due to its ongoing growth in India and EV technologies, leveraging support from headquarters.

Asked by Balasubramanian

Localization of wind turbine components Direct
So, wind too has a few bearings that we do not make here, considering the limitations of the machines that we have. So, there are clear investment plans in that direction as well to bring in those sizes of bearings to be manufactured here in India, which we today are importing. So, we have a clear plan for the wind as well going forward.

Management outlined plans to localize production of certain imported bearings for the wind segment, indicating future investment and import substitution.

Asked by Saif Sohrab Gujar

2 min read 6 chapters

Detailed narrative

Financial Performance Overview

Schaeffler India Limited reported a strong Q2 CY25, with revenue reaching ₹2,282 crores, an 8.2% increase QoQ and 10.1% YoY. EBITDA stood at ₹449 crores, translating to a 19.7% margin, up 10.3% QoQ and 16.6% YoY. Profit After Tax (PAT) was ₹296 crores, with a 13% margin, growing 11.6% QoQ and 17% YoY. For the first half of CY25, revenue was ₹4,392 crores, a 12% YoY growth, with an EBITDA margin of 19.5% and PAT margin of 12.8%. The company also generated a robust free cash flow of ₹287 crores in the quarter.

Customer Recognitions and CSR Initiatives

The company received four customer awards, including two from the Toyota Group for 'Zero Defect Supplies' and '100% Delivery', one from Honda Limited for its 'Vehicle Lifetime Solutions' business, and one from Alstom for its Railway sector contributions. Additionally, Schaeffler India was recognized with three agency awards for its Corporate Social Responsibility (CSR) initiatives, notably for the 'Jal Samruddhi' water conservation project and 'Diversity and Inclusion' efforts focused on women empowerment in Tamil Nadu.

Strategic Investments and E-mobility Expansion

Schaeffler India inaugurated its fifth manufacturing facility in Bangalore in May, dedicated to clutch and drivetrain applications, spanning 16,500 square meters with potential for 3x expansion. The company also commenced series supplies of e-axles for the Tata Harrier platform, inaugurating a partial production line in Talegaon and planning a Phase 2 expansion for further localization. The e-axle project has a projected lifetime order value of €300 million, with a clear focus on the Indian e-mobility market.

Market and Sector Performance

The Q2 CY25 GDP is estimated at 6.5%, a slight drop from the preceding quarter. Automotive production remained stagnant, with domestic passenger car sales lower but exports showing double-digit growth. Commercial vehicles were subdued, but agricultural tractors experienced strong month-over-month and year-over-year increases. Industrial production saw a slowdown, though cement and steel sectors performed well. The consumer price index dropped to 2.7%, the lowest since 2019, which is expected to positively impact consumption.

Localization and Capacity Utilization

The company's localization rate improved to 78-79% in Q2 CY25, up from 75-76% in the previous quarter, driven by strong export demand and a strategic focus on domestic production. This has enabled better utilization of existing capacities. Overall capacity utilization is currently close to 85%, with all plants operating above 80%. In the last year, over 27 different types of bearings, including some for the wind segment, have been localized.

Koovers Business Performance

KRSV Innovations Auto Solutions Limited (Koovers) generated ₹71 crores in revenue during Q2 CY25, aligning with the company's plans. However, the business continues to face challenges with negative margins, reporting an EBITDA of -15% and an EBIT of -16.8%. Addressing these margin challenges is a key focus area for management to improve the consolidated financial performance.

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls