Detailed Summary

Key Financial Performance (Q3 CY26)

Consolidated Performance (Schaeffler India Limited):

  • Revenue: INR 3,005 crore, representing a 27.4% year-on-year (YoY) growth and a 12.1% quarter-on-quarter (QoQ) growth.
  • EBITDA: INR 562 crore, with a margin of 18.7% (compared to 19.1% in the preceding quarter).
  • Profit After Tax (PAT): INR 370 crore, with a PAT margin of 12.3% (compared to 12.6% in the preceding quarter).
  • Free Cash Flow: INR 41 crore for the quarter, described as phenomenally lower.
  • Capital Expenditure (Capex): INR 182 crore invested in Q3, the highest in the quarter.

Segment-wise Revenue Growth (Q3 CY26 vs. Q3 CY25):

  • Automotive Technologies: 35.0% YoY growth.
  • Vehicle Lifetime Solutions (Aftermarket): 22.0% YoY growth.
  • Bearings and Industrial Solutions (B&IS): 14.7% YoY growth.
  • Exports (Intercompany): 46.3% YoY growth.

Revenue Mix (Q3 CY26):

  • Automotive Technologies: 37%
  • Bearings and Industrial Solutions: 35%
  • Exports: 17%
  • Vehicle Lifetime Solutions: 11%

Nine-Month Performance (9M CY26)

  • Revenue: 21.4% growth over the previous year.
  • EBITDA Margin: 19.0%
  • EBIT Margin: 15.8%
  • PAT Margin: 12.5%
  • Capex: INR 357 crore
  • Free Cash Flow: INR 274 crore

Subsidiary Performance (KRSV Innovative Auto Solutions Private Limited)

  • Q3 CY26 Revenue: INR 83.7 crore
  • EBITDA: -17.6%
  • EBIT: -19.4%

Business Highlights and Operational Updates

Margin Pressure and Recovery:

Management attributed margin pressure to increased input costs, volatility in the market, and the West Asia crisis, which impacted energy and fuel prices. A gross margin improvement of INR 192 crore was achieved in the quarter through partial recovery of inflationary input cost increases. The total input cost increase was approximately 1.1% of quarterly sales, of which 50% has been recovered. Negotiations are ongoing for the remaining 50%, with a historical recovery rate of 80-85% cited.

Working Capital and Inventory:

Working capital as a percentage of sales increased to nearly 19%. This was attributed to both planned increases for localization projects and an unplanned inventory buildup in the e-mobility business due to an unbudgeted sharp increase in demand. Management expects this inventory to be sold out by December 2026.

Export Business:

The strong export growth (46.3% YoY) was driven by demand for industrial bearings, with 45% of exports going to Europe and 35% to Asia Pacific. Management clarified that Q3 typically sees a spike in intercompany exports due to the group's year-end billing cycle in December. They indicated that the Q4 export run rate is expected to be slightly lower than Q3's INR 500+ crore, as orders are based on a 90-day frozen period and are not considered a permanent new baseline.

New Business Wins:

The company highlighted significant new business wins across divisions:

  • Automotive Technologies: Engine components (lash adjusters, HLA-RFF, roller tappets), clutch portfolio for passenger vehicles, and rocker arm assemblies.
  • Vehicle Lifetime Solutions: Front-end auxiliary drive, timing kits, bearings portfolio, and lubricants.
  • Industrial Division: Market share gains in cylindrical, medium roller, and ball bearings; actuators and bottom roller bearings in industrial automation; and TAROL/TRB products in the railway sector.

Industrial Automation Segment:

Management stated that the industrial automation sector currently represents about 3% of total revenue. While bearings are manufactured locally, actuators (rotary and linear) are still imported. The company is strategizing to become more competitive in this sector.

Capex and Localization:

The company is committed to its capex framework, with a full-year CY26 guidance of ~INR 500 crore. The localization target has been moved from 80% to 85%. Purchases of traded goods as a percentage of revenue were reported at below 20% for the quarter.

Response to Analyst Queries:

  • Vitesco India Merger: Management confirmed there are no plans to merge Vitesco India with Schaeffler India Limited, though Schaeffler India already sells the Vitesco portfolio.
  • Promoter Stake Sale: The company referenced a prior SEBI disclosure where the promoter expressed an intent to reduce its stake from ~74% to ~67-68% for minor monetization, emphasizing this is an intent and not an implemented action.
  • CY27 Capex: Guidance for CY27 capex is averaging close to the CY26 level (~INR 500 crore), potentially slightly higher, with budgets still under preparation.

Forward-Looking Statements

Management expressed confidence in maintaining double-digit growth momentum and focused on margin recovery and working capital management in Q4 CY26. They indicated optimism for the automotive industry (PV and CV sectors) to perform well into 2027.