Schaeffler India Limited

Schaeffler India reported robust financial results for Q3 CY25, with total revenue reaching INR 2,360 crores, marking a 13.9% year-on-year growth and 3.4% quarter-on-quarter growth. The company achieved a significant milestone by breaching the 20% EBITDA margin barrier for the first time, reaching 20.2%, up from 19.7% in the preceding quarter. Profit After Tax (PAT) also saw a strong increase of 24% year-on-year, totaling INR 307 crores. This performance was supported by a healthy free cash flow of INR 223 crores for the quarter.

The automotive industry showed mixed trends; passenger vehicle sales declined by 1-1.5% in Q3 due to initial uncertainty from GST reforms, though a strong uptick is anticipated in Q4. Commercial vehicles grew by 6% YoY, and tractors saw stronger traction due to better monsoons. The Bearings and Industrial Solutions segment experienced a decline in Q3, attributed to timing issues in project-based and tender-based businesses rather than structural weakness. Overall, India's GDP growth was strong, estimated at 6.4%, with stable automotive production and lower inflation at 1.7%.

A key highlight for the quarter was the increase in localization content to 79%, reinforcing the company's commitment to 'Atmanirbhar Bharat' and contributing to margin improvement. Schaeffler India secured new business wins across automotive (clutch applications, hydraulic tensioners) and industrial sectors (cylindrical roller bearings, taper roller bearings, slewing rings). The company also launched large-sized spherical roller bearings with cast steel housing, manufactured at its Savli plant, targeting the steel, cement, mining, power, and pulp & paper industries.

The e-commerce platform, KRSV Innovative Auto Solutions (Koovers), contributed INR 74.8 crores in revenue for Q3 CY25. However, it continues to operate at a loss, reporting negative EBITDA of 14.7% and EBIT of 16.7%. Management stated that as a start-up acquired in Q4 2023, breakeven is not expected until 2027, with current focus on expanding dark stores and hubs. Actions are underway to improve operational efficiency and reduce operating losses.

The company's capital expenditure for the nine-month period stood at INR 267 crores. Management emphasized a focus on capital efficiency and leveraging existing assets, particularly after significant investments in the past three years. While the parent has committed EUR 500 million for capex over the next five years in India, a major pickup in new investments is anticipated from 2027 onwards. The Savli plant, where new products are manufactured, is currently operating at a high capacity utilization of 90%.

Schaeffler India remains committed to double-digit business growth and sustaining its operating performance. The company aims to reach 80% localization content in the near future. Strategic initiatives include continuing to localize production, launching new products not previously made in India, and expanding market share across key sectors. The relocation of a clutch manufacturing line from the UK to India is progressing, expected to contribute to revenues by the end of this year or early next year, driven by the shift from ICE to EV technology in Europe.