Schaeffler India Q2 FY26 Earnings Call — Analysis (NSE: SCHAEFFLER)
Schaeffler India posts Q2 revenue ₹2,681 Cr (+17.5% YoY, +7% QoQ) and EBITDA ₹513 Cr (+14.3% YoY) with margin 19.1%, overcoming input cost and FX headwinds through market share gains and export strength.
The take
Q2FY26 Revenue ₹2,681 Cr ( +17.5% YoY ) . New guidance — FY26 export revenue growth 15-20% growth . New story: Market share gains in automotive technologies .
Results
Revenue ₹2,681 Cr +17.5% YoY; EBITDA ₹513 Cr (margin 19.1%); PAT ₹337 Cr +5.3% YoY; six-month revenue growth ~18% YoY.
Financial highlights
| Metric | Value | Change | Basis |
|---|---|---|---|
| Revenue | ₹2,681 Cr | +17.5% | yoy · Q2FY26 |
| EBITDA | ₹513 Cr | +14.3% | yoy · Q2FY26 |
| PAT | ₹337 Cr | +5.3% | yoy · Q2FY26 |
| EBITDA Margin | 19.1% | point_in_time · Q2FY26 | |
| Six-month Revenue Growth | ~18% | yoy · H1FY26 | |
| H1FY26 EBITDA Margin | 19.2% | point_in_time · H1FY26 | |
| CY26 Capex Plan | ₹400-500 Cr | point_in_time · FY26 · full-year plan | |
| H1 Capex | ₹175 Cr | point_in_time · H1FY26 · half-year actual |
Guidance
Capex for CY26 planned at ₹400–500 Cr; H1 spend ₹175 Cr, remaining to be utilised in H2 to expand capacity and localisation.
What management committed to
- We expect some positive traction on price corrections from OEMs in the second half of this year, particularly on input cost increases for LPG and propane that are not on the indexation list. — H2FY26
- Capex for CY26 is pegged at ₹400-500 crores; we have done ₹175 crores in H1 and will consume the remaining ₹225-325 crores in the second half to expand manufacturing capacities and localisation. — ₹400-500 Cr (full year), ₹225-325 Cr remainder in H2, FY26
- Koovers (KRSV Innovative Auto Solutions) is expected to reach EBITDA and cash flow breakeven by 2029. — breakeven, FY29
- Exports revenue growth for FY26 is very likely to be maintained in the range of 15-20% growth, as the order book is solid for the year, though we are cautious on geopolitical disruptions. — 15-20% growth, FY26
- Our aspiration is to make sure the industrial business too gets to a double-digit growth rate. — double-digit growth rate
Key themes
Market share gains, capacity expansion, and export resilience
How the narrative shifted
- Market share gains in automotive technologies: Management highlights that Automotive Technologies revenue grew 3.6% QoQ while PV production dropped 8%, indicating sustained market share gains driven by new business wins and e-mobility ramp.
- Export intercompany allocation as growth engine: Exports surged 24% YoY on strong intercompany demand; management sees solid order book for the year and aims to maintain momentum while keeping exports at ~20% of revenue for natural hedging.
- Capacity constraints limiting aftermarket growth: Vehicle Lifetime Solutions growth slowed to 9.9% because Hosur plant capacity prioritised OEMs; management is actively addressing capacity and supplier development to unlock aftermarket potential.
- Industrial recovery led by infrastructure & metals: Non-mobility industrial side grew double-digit, driven by cement, steel, aluminium, and power transmission, benefiting from government infrastructure push; wind energy and railways yet to pick up.
- Input cost and FX pressure with delayed pass-through: LPG, propane, freight, and FX increased costs; OEM indexation covers only some items, and labour/wage hikes not pass-through; price negotiations underway, recovery expected in H2.
- Strategic inventory build for customer service: Working capital rose to ₹2,029 Cr on planned inventory accumulation for specific customers and sectors; management asserts it is a deliberate, reversible move that will enhance service levels.
Operational commentary
- Automotive Technologies gained market share: revenue grew 3.6% QoQ despite a ~8% drop in passenger vehicle production, driven by new business wins (double clutch for tractors, overrunning alternator pulleys) and conventional ICE engine growth of ~20% alongside e-mobility ramp.
- Exports surged 24% YoY (H1 ~28% YoY) on strong intercompany demand from all regions; management sees solid order book for the year and aims to maintain momentum while keeping exports around 20% of revenue for natural hedging.
- Vehicle Lifetime Solutions growth moderated to 9.9% YoY due to capacity constraints at the Hosur plant; management is addressing capacity and supplier development to prioritise both OEM and aftermarket demand; REPXPERT vans revived to expand coverage and upskill mechanics.
- Bearings & Industrial Solutions grew ~5% YoY but non-mobility side saw double-digit growth led by core metals (steel, cement, aluminium) and power transmission; wind energy impacted by global contract negotiations, railways lagged on tender timing; industrial aftermarket offers growth opportunity.
- One of the largest-ever value of new business wins secured in industrial bearings (cylindrical rollers, DGBB, SRB, TRB) during the quarter.
- Input cost pressures from LPG/propane, freight, and adverse FX impacted margins; OEM price negotiations ongoing with expectation of some recovery in H2; wage inflation (~10% from new labour codes) not pass-through; productivity measures being deployed.
- Working capital rose to ₹2,029 Cr, attributed to strategic inventory build for specific customer accounts; free cash flow impacted but management expects recovery in H2.
- Koovers (KRSV) subsidiary recorded ₹79 Cr revenue (−13.4% EBITDA margin) with breakeven targeted by 2029; accounting policy change and founder bonus provisions affected margins in Q2.
Analyst Q&A
Q. Industrial segment growth soft at ~5% YoY; when does it return to double-digit?
Non-mobility industrial side grew double-digit, driven by core metals and power transmission; wind energy timing and railway tenders lagged. Aspiration is to get industrial to double-digit growth, with focus on aftermarket distribution.
Q. What is sustaining export outperformance and can FY26 guidance be revised?
Growth driven by intercompany allocations leveraging India capacities, strong demand from all regions. Order book solid; very likely to maintain momentum, but cautious due to geopolitical uncertainties. Clarified that no formal growth guidance was given, only a cap of 20% of revenue.
Q. Why did Vehicle Lifetime Solutions growth slow to 9.9%, and can it re-accelerate?
Capacity constraints at Hosur plant forced prioritisation of OEMs over aftermarket; work underway to add capacity and develop suppliers to better serve VLS demand.
Q. When will Koovers reach breakeven, given worsening EBITDA margin?
EBITDA impacted by accounting policy change and founder bonus provision (~₹5.6 Cr one-off). Breakeven expected by 2029.
Q. How does pricing pass-through work across segments for commodity and FX?
Automotive OEMs work on indexation but labour and some commodities excluded; LPG/propane cost recovery under negotiation. Intercompany exports use arm's-length transfer pricing with annual true-up. Aftermarket pricing flexibility not disclosed.
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