Schaeffler India Limited

Schaeffler India received several accolades in Q4 CY25, including awards from customers like Voith (for zero quality complaints), Eicher Motors (for supply chain transformation in aftermarket), and Mahindra & Mahindra (for on-time engine system deliveries). The company was also recognized for its CSR efforts, receiving 'Doing Good for Bharat Awards' for its 'Women Skill Development and NITARA' project and 'Jal Samruddhi' water conservation project, which has impacted approximately 2,500 people.

India's GDP growth in Q4 CY25 reflected strong domestic demand and structural reforms. Inflation was significantly lower, averaging 2.2% for CY25 and 0.8% in Q4. Industrial production saw a 5% appreciation over the preceding quarter, with strong performance in cement (10% growth) and steel (9% growth). The automotive sector benefited from GST 2.0 reforms, with 2-wheelers growing 8.6% annually, passenger vehicles 8%, commercial vehicles 8.4%, and tractors 17.2%. Exports also showed strong double-digit growth, with 2-wheelers up 24% and commercial vehicles up 58% for the full year.

The company reported a Q4 CY25 revenue of ₹2,643 crores, marking a 26.9% YoY increase and a 12% QoQ increase. Full-year CY25 turnover reached ₹9,395 crores, a 16.3% growth over the previous year. EBITDA for Q4 CY25 was ₹505.6 crores, with a margin of 19.1%, compared to 20.2% in the preceding quarter. Full-year EBITDA margin stood at 19.6%, an improvement from 18.5% in CY24. Profit after tax for Q4 CY25 was ₹328 crores, resulting in a PAT margin of 12.4%, up from 12% in Q4 CY24. The company also generated ₹254 crores in free cash flow during the quarter.

Schaeffler India secured new business wins across various segments. In automotive technology, this included passenger vehicle clutches, Dual Mass Flywheels, hydraulic cam phases, and light vehicle clutches. For vehicle lifetime solutions, wins were recorded in front-end auxiliary drive mechanisms and timing kits for passenger vehicles. In Bearings and Industrial Solutions, significant wins were achieved in ball bearings, needle roller bearings for 2-wheelers, and tapered roller bearings for industrial applications in cement and steel sectors. The e-Axle project exceeded its 2025 projections, with ongoing investments in localization phase 2 to enhance competitiveness.

The company maintained its commitment to capex, with CY25 spend in the range of ₹375-400 crores. While capex was moderated in 2025 to focus on asset utilization and capital efficiency, plans are to step up investments to over ₹500 crores in 2026, aligning with the long-term strategy for 2026-2030. Capacity utilization across all plants remained robust, exceeding 85%. Working capital management improved, with working capital as a percentage of sales reducing to 17.9% in Q4 CY25, better than the 19% in the same period last year.

KRSV Innovative Auto Solutions Private Limited (Koovers), a subsidiary, generated ₹81.5 crores in revenue in Q4 CY25. While losses widened in the quarter, management indicated that the infrastructure build-out (dark stores and hubs) is largely complete. The strategy for 2026 will shift towards moderating growth and focusing on channel and product mix to improve financial parameters and achieve breakeven, leveraging the established infrastructure.

Schaeffler India achieved a significant milestone by being evaluated by S&P Dow Jones Sustainability Index, ranking first in India and seventh globally. This recognition underscores the company's focus on sustainability and ESG targets. The overall CSA score improved significantly to 76 out of 100, a 40-point increase from the previous evaluation, demonstrating strong credentials in environmental, social, and governance areas.

The company anticipates benefits from the upcoming India-EU trade agreement, particularly for imports of raw materials and components, which currently attract duties of 7.5-15%. This could lead to a re-evaluation of the localization strategy versus importing. Exports to Europe, however, are expected to see less impact as duties are already low (0-2%). The potential impact of a US FTA is currently unclear, with exports to the US not being a major component of the business.