Schaeffler India Q4 FY24 earnings call
In brief
Schaeffler India Q1 CY24: revenue ₹1,849 cr (+9.2% YoY), PAT ₹227.7 cr at 12.3%; 4-division restructure from 1 April 2024.
- Management's tone
- Mixed
- What was said
- Even-handed
- Guidance
- None given
- Analyst pushback
- Low
- Stock, next session
- +1.84% (Nifty 50 −0.67%)
- Q1 CY24 standalone revenue ₹1,849 cr (+9.2% YoY), EBITDA ₹338.8 cr at 18.3% margin, PAT ₹227.7 cr at 12.3% margin.
- Restructured into 4 divisions from 1 April 2024: E-Mobility (new), Powertrain & Chassis, Vehicle Lifetime Solutions, Bearings & Industrial Solutions.
- Exports rebounded 19.6% QoQ but still down 7.6% YoY; consolidated revenue ₹1,873 cr with EBITDA margin 17.8%.
- Free cash flow turned negative at -₹25.6 cr (vs +₹177 cr in Q4 CY23); working capital ₹1,352 cr, targeted at 17-19% of sales.
- Bearings & Industrial Solutions grew ~16% YoY at 42% of revenue mix; wind demand rebounded ~70%, two-wheeler segment strong.
An AI read of the company's transcript · the filing
The numbers
The quarter, Q4 FY24
| This quarter | A year ago | Last quarter | Margin | |
|---|---|---|---|---|
| Revenue | ₹1,873 cr | — | −0.1% | |
| EBITDA (excl. other income) | ₹330 cr | — | +3.3% | 17.6% |
| Net profit | ₹0 cr | — | — | 0% |
| EPS (₹) | ₹14.10 | — | +5.2% |
From the company's filed results for the quarter ended 31 Mar 2024 (consolidated), not from the call. EBITDA here excludes other income, so it can differ from the figure management quotes.
What moved the numbers, as management explained it
- Industrial segment added ₹107 cr QoQ driven by wind demand (~70% growth) and two-wheeler rebound (sector +25.6%).
- Wage agreement settlements and performance increments raised employee costs, pressuring EBITDA margins modestly YoY.
- Exports dropped ₹20 cr QoQ from sluggish European and Asian demand in prior quarters; sequentially up 19.6% in Q1.
- Working capital build to ₹1,352 cr and higher CAPEX of ₹173 cr drove free cash flow to -₹25.6 cr (vs +₹177 cr in Q4).
- Gross margins improved YoY but partly offset by adverse impact from expenses and other income areas.
- Localization at 77% (vs 75% last year) supported margin resilience despite ~7-8% inflationary pressure.
The numbers management led with
- Localization percentage: 77% in Q1 CY24 vs ~75% prior year
- Q1 capex: ₹173 crore (vs ₹118 cr YoY); capex/sales at 7%
- 3-year capex commitment: ₹1,500 crore over CY22-CY24
- Wind demand growth: ~70% YoY growth in Q1 vs Q1'23 in industrial bearings wind applications
Guidance
Guidance on this call
| What | For | What management said |
|---|---|---|
| 3-year CAPEX commitment | FY22-FY24 | ₹1,500 cr over three years; third year commitment |
| Working capital as % of sales | — | Working capital at 17% to 19% of sales |
| Hosur plant completion | CY24 | Hosur greenfield project expected complete by end of 2024 |
| Exports - maintain average | CY24 | Plan to maintain the average through the year |
The business
By business
Bearings and Industrial Solutions
Renamed industrial division; bearings from automotive moved in. Grew ~16% YoY. Wind demand up ~70%, two-wheeler segment rebounded, power transmission strong.
+16% YoY · 42% of revenue · +₹107 cr QoQ addition · Wind demand +~70%
Outlook: Wind equipment expected to recover further; margin benefits when tractor and CV markets return
Automotive Technologies
Renamed Automotive Division (excluding new E-Mobility). +9.1% YoY, +4.8% QoQ. New wins in CV and PV transmissions, double clutch and dampers.
+9.1% YoY · +4.8% QoQ · 35% of revenue · +₹56 cr QoQ
Outlook: Continue IC engine investments, prepare for BS-VII/CAFE; pursue electric vehicle business wins
Vehicle Lifetime Solutions
Renamed Automotive Aftermarket. +9.7% YoY but -13.2% QoQ (Q1 typically cyclical low). Added coolants, grease, timing kits to portfolio.
+9.7% YoY · -13.2% QoQ · 9% of revenue · +₹14 cr QoQ
Outlook: BS-VI repairs ramping; B2B e-commerce via Koovers (KRSV) acquisition driving expansion
Exports
Intercompany sales to Schaeffler group. Sequential rebound of 19.6% QoQ but still down 7.6% YoY. Recovery from Europe, Asia Pacific, China.
+19.6% QoQ · -7.6% YoY · 14% of revenue
Outlook: Order book promising; management plans to maintain average through the year
Balance sheet, capex and funding
- CAPEX ₹173 cr in Q1 CY24 (vs ₹118 cr YoY), 7% of sales; ₹1,500 cr 3-year commitment in third year
- Free cash flow -₹25.6 cr in Q1 (vs +₹177 cr in Q4 CY23, +₹3 cr in Q1 CY23); seasonally muted start
- Working capital ₹1,352 cr; management targets 17-19% of sales range
- Localization at 77% as of Q1 (vs ~75% last year); Hosur plant construction underway
- Hosur greenfield plant: first hall under construction; project expected complete by end of 2024, production next year
- Consolidated EBITDA margin 17.8% on ₹1,873 cr (incl. KRSV in ramp-up mode)
The industry, as management sees it
Indian auto sector showing mixed dynamics with strong 2W (+25.6%) and PV (~11%) growth offset by weak MHCVs and tractors (-15%); core industrial sectors (cement +8%, steel +8.6%, coal +11%) indicate strong manufacturing activity. Wind energy demand rebounding with gearbox manufacturers driving recovery while wind equipment demand improving at slower pace.
Risks management named
- Export market volatility with continued Western/European sluggishness
- Free cash flow negative in Q1; management committed to recovery focus
- Working capital expanded to ₹1,352 cr to support anticipated demand recovery
- Market remains very volatile and uncertain per CEO commentary
- CY24 capex mix is in execution mode - spending will be judicious and agile
Q&A
Q&A was dominated by exports (5 of 15 questions) where management confirmed a broad-based QoQ rebound but repeatedly flagged sustainability concerns, calling the Q1 bounce 'surprising' and asking for 2-3 more quarters of observation. Detailed questioning on the new organizational structure (E-Mobility, Bearings & Industrial, VLS) showed analysts mapping the changes to existing segment disclosures. Capex commitment of ₹1,500 cr over 3 years was reaffirmed multiple times with Hosur plant due by CY24 end. The Vitesco India integration timeline and CY24 capex number were the only items management declined to commit on.
Not answered directly
- Vitesco India integration timeline
- CY24 specific capex guidance
- Specific localization product lines
Asked for a number, answered without one
- Full-year CY24 CAPEX number: Can be over that, but we don't give the year guidance
- E-axle project timeline and start of business: the project is progressing very well with our customer, and it is according to the timelines that we have committed... I cannot share more details on the project
- Vitesco integration into Schaeffler India: the full integration of Vitesco within the Schaeffler India Limited listed entity would take some more time... I'm not in a position to reveal the time plan for this
- Consolidated aftermarket share of total sales: Vehicle Lifetime Solutions from domestic sales close to 10%, similar in industrial distribution; no consolidated figure
Every question, with its answer
1. Exports outlook
Mukesh Saraf, Avendus Spark
Question. On exports, you mentioned surprise at the pickup in Q1. Can you give more color on the ramp-up and whether sequential improvement can continue?
Answer, Hardevi Vazirani, CFO. Exports grew more than 10% QoQ in Q1 vs Q4 with broad-based recovery across all regions. European customers had destocked to optimum levels and resumed orders, while management made conscious efforts to acquire Asia Pacific market. Order book looks promising; we plan to maintain the average through the year.
Follow-up. Can we expect this sequential improvement to continue from here?
Answer. Order book looks promising; we plan to maintain the average through the year.
Partly answered.
2. E-axle order timeline
Mukesh Saraf, Avendus Spark
Question. On the e-axle order, can you share timeline on when business starts this year?
Answer, Harsha Kadam, Managing Director & CEO. The e-axle project is progressing very well with the customer, on track with committed timelines. Phased investments are on track. Localization strategy implementation has begun with some production line localization actions underway. Cannot share more project details but we are on track.
Follow-up. Under mobility solutions, you have industrial bearings - does that include only railways/tractors?
Answer. The new division is called Electric Mobility - purely for on-road electric mobility. Railway continues to remain under Industrial (now Bearings & Industrial Solutions). No changes within erstwhile industrial division; only addition is bearings business moved from automotive.
Partly answered.
3. Segment classification
Mukesh Saraf, Avendus Spark
Question. In the stock exchange release, segmental revenue shows 'mobility components and related solutions' and 'others' - what are the differences?
Answer, Hardevi Vazirani, CFO. Mobility components is linked to passenger vehicles, tractors, railways. Sectors like wind, power transmission, industrial distribution fall under 'others'. Everything related to mobility is in Category-A and rest are in Category-B.
4. Wind sector recovery
Harshit Patel, Equirus Securities
Question. On the wind sector - CY23 saw sluggish exports from India. Can we reach CY22 levels in CY24 and what is wind's share of revenues currently?
Answer, Harsha Kadam, Managing Director & CEO. CFO clarified wind is not in exports - Schaeffler sells domestically to wind producers who export to Europe. Of total wind business, 80-85% is exported by customers. Demand has seen strong uptick - ~70% YoY growth in Q1 vs Q1'23, especially from gearbox manufacturers. Wind equipment demand improved but not at the same pace as gearboxes.
Follow-up. On pricing - any price cuts in bearings both auto and industrial given commodity inflation has stabilized?
Answer. Pricing is linked to commodity movements via contractual agreements. If prices went up, we recover; if down, we pass on benefits. Aftermarket is different - we do increase prices annually to cover inflationary increases.
5. Aftermarket pricing
Harshit Patel, Equirus Securities
Question. Do you also pass on commodity benefits in aftermarket?
Answer, Harsha Kadam, Managing Director & CEO. No - aftermarket invariably increases prices to cover inflation. All component manufacturers raise prices annually in auto and industrial aftermarket unless strategically decided otherwise.
Follow-up. In Vehicle Lifetime Solutions, are there still bearings or have these moved to new Bearings & Industrial segment?
Answer. VLS will continue to sell bearings and other products - only manufacturing has moved under industrial. From external customer perspective nothing changes; it's internal restructuring with reallocation of team and plant/machinery.
6. Export geography mix
Pradeep Bijlani, Union AMC
Question. On exports - despite wind not being part of exports, order book is strong. Which geography is driving growth - North American or European?
Answer, Hardevi Vazirani, CFO. QoQ export uptick came from all markets - Europe, America, Asia Pacific, China. Europe (main contributor) had optimized stocks and order book resumed. Asia Pacific contributed materially through conscious management efforts.
Follow-up. On Vitesco merger at global level - what happens to Vitesco India entity and Schaeffler India entity? Any timelines?
Answer. Vitesco is a strategic global acquisition for Schaeffler to access power electronics for EV tech. Vitesco is present in India as a private limited company; evaluating functional integration. Full integration within Schaeffler India listed entity would take more time given due diligence. Cannot reveal the time plan.
Not answered directly.
7. Railways pricing dynamics
Pramod Amthe, InCred Equities
Question. On railways segment - what's the pricing scenario given incumbents exist and you're entering?
Answer, Harsha Kadam, Managing Director & CEO. Railways model transforming from tenders to private partnerships. Privatization happening especially in wagons. Less tendering, more technological discussions. Railways is a growing business; we have portfolio that can compete as modernization raises performance levels. Cannot answer pricing precisely but model is transforming.
Follow-up. On 10 new products in annual report - which are the big ones for revenue over next 2-3 years?
Answer. Strategy covers IC engines (still growing albeit lower CAGR), upgrading products for CAFE/BS-VII norms, EV technology investments with phased localization. Big wins on both automotive and e-mobility sides.
Not answered directly.
8. Capex impact on financials
Mahesh Bendre, LIC Mutual Fund
Question. On ₹1,500 cr capex over 3 years - when will this get reflected in numbers?
Answer, Hardevi Vazirani, CFO. Partially reflecting already. Investments cover Hosur new plant, backward integration, roller localization in Savli - not directly linked to sales increase but to localization of finished products. Company can sustain margins despite 7-8% inflation because localization has been done for child parts. Effects will be visible when tractor and CV markets recover.
Follow-up. Will capex influence operating margins because imported things get produced locally?
Answer. Already impacting - that's why EBITDA margins sustained close to 18% despite 7%+ inflation in prices, personnel, fuel. Several measures in those directions.
Partly answered.
9. Aftermarket revenue share
Mahesh Bendre, LIC Mutual Fund
Question. Out of total sales, how much is from aftermarket - both auto and industrial?
Answer, Hardevi Vazirani, CFO. Vehicle Lifetime Solutions is close to 10% of domestic sales; similar would be in industrial distribution.
10. Hosur plant progress
Saif Gujar, ICICI Prudential AMC
Question. Where are we on the Hosur plant?
Answer, Harsha Kadam, Managing Director & CEO. Foundation stone laid last year, first hall construction underway. Leadership team assessed progress last month - on track. Machines will roll in once hall and building complete. Expect production from CY25. Entire project to be completed by end of CY24.
11. Asia Pacific export strategy
Salil Desai, Marcellus Investment Managers
Question. On the new export efforts in Asia Pacific - what are these efforts? Do you need to put marketing teams there?
Answer, Hardevi Vazirani, CFO. India is part of Asia Pacific region. Ongoing discussions with Asia Pacific management board on order book. Present in 11 countries - 7 in Southeast Asia (Indonesia, Philippines, Malaysia, Thailand, Korea). Management boards meet regularly; industrial division colleagues in those countries put extra effort. Southeast Asia has few local plants producing our products so they import from us.
Follow-up. This would be a more sustainable source of exports, not a one-time win?
Answer. That's what we are trying to do.
Partly answered.
12. Industrial growth breakdown
Mumuksh Mandlesha, Anand Rathi
Question. Industrial and bearings saw 15% YoY growth and Q4 was 5% growth. From which sectors did you see much better growth this quarter? Also on aftermarket, was there 10% growth in sub-sectors that saw good growth?
Answer, Harsha Kadam, Managing Director & CEO. Strong sectors in industrial in Q1: wind, two-wheelers (now classified under industrial), power transmission (gearboxes and electric motors). Also cement and steel but not as high. Wind and 2W were strongest. VLS first quarter is always low seasonally; vehicle parc growth driving demand. Koovers acquisition was to facilitate VLS growth.
Follow-up. Fair to say VLS growth has come across product lines and sub-segments?
Answer. Yes. BS-IV to BS-VI transition happening in 2020 - now BS-VI vehicles coming back for repairs. Portfolio proactively developed for BS-VI; servicing these vehicles well. Also ready for BS-VII.
13. Content per vehicle under new norms
Mumuksh Mandlesha, Anand Rathi
Question. On upcoming CAFE and BS-VII norms - how do you see change in content per vehicle?
Answer, Harsha Kadam, Managing Director & CEO. When BS-IV to BS-VI transition happened, product value went up to meet new requirements. If BS-VII comes, we are prepared with engineering capabilities to reengineer existing products for new regulatory demands. Have done this in the past, will continue in future.
14. Exports segments and CY24 capex
Rishi, Kotak Securities
Question. On exports - which end consumer segments are important and where are green shoots on sequential basis? Any capex number for CY24?
Answer, Hardevi Vazirani, CFO. These are intercompany exports - supply to group companies who sell to end markets. Mainly in industrial division, some parts in automotive. Capex: ₹1,500 cr over 3 years reaffirmed; this is third year and we will keep the promise.
Follow-up. Despite Q1 capex of ₹170 cr, full year would still be around ₹500 cr?
Answer. Can be over that, but we don't give year guidance.
Not answered directly.
15. Localization strategy
Balasubramanian, Arihant Capital
Question. On localization - what kind of subsystem level products are you focusing on in automotive segments?
Answer, Harsha Kadam, Managing Director & CEO. Cannot share specifics of product lines being localized. Localization at 77% in Q1 vs ~75% last year. Effort on localizing more at component level for automotive applications where we import high-specialty products from Europe. Clear focus on localizing purchases sourced from suppliers outside India.
Not answered directly.
What was said
Topic by topic, in the order it was spoken
Customer Recognition & CSR Awards · Harsha Kadam (CEO)
- Won 'Best Supplier Award' from TAFE for double and single clutch products in tractor transmission application
- Fifth consecutive 'Partnership Award for Quality and Technology Support' from John Deere for tractor applications
- UBS Forums recognized Schaeffler's 'Step Center' CSR program as one of the best skill development programs
- Over 1,000 rural youth trained in CNC, turning, milling and mechatronics in FY23 with 80% securing placements
Macro & Industry Context · Harsha Kadam (CEO)
- India GDP growth projected at 7.2% in Q1 2024 supported by moderating inflation and domestic demand; RBI revised FY25 forecast from 6.6% to 7%
- IIP shows double-digit growth in mining (+8%), manufacturing (+5%) and electricity (+7%)
- Auto production grew 5.2% YoY with 2W +25.6%, PVs ~11%; MHCVs and tractors -15% remained weak
- Core sector data: cement +8%, steel +8.6%, coal +11% YoY for Jan-Feb indicating strong industrial activity
Organizational Restructuring - 4 Divisions · Harsha Kadam (CEO)
- Restructured from 3 to 4 divisions effective April 1, 2024 - new operating model
- Created standalone E-Mobility division to capture electric mobility opportunity
- Automotive Technologies split into Powertrain & Chassis and E-Mobility verticals
- Aftermarket renamed Vehicle Lifetime Solutions; Industrial renamed Bearings & Industrial Solutions
- Bearings business reallocated from automotive into industrial; segment disclosures realigned accordingly
Q1 Financial Performance · Harsha Kadam (CEO)
- Q1 revenue ₹1,849 cr with 9.2% YoY growth, broadly flat QoQ
- EBITDA ₹338.8 cr at 18.3% margin vs 17.9% QoQ; absolute EBITDA growth 4.9% YoY and 1.8% QoQ
- PAT ₹227.7 cr at 12.3% margin vs 11.7% QoQ; absolute growth 3.8% YoY and 4.4% QoQ
- Free cash flow turned negative at -₹25.6 cr vs +₹177 cr in Q4; first quarter typically muted
Segment Performance & Mix · Harsha Kadam (CEO)
- Domestic India growth at 12.4% YoY across sectors; exports down ₹20 cr QoQ on European/Asian softness
- Auto Technologies grew 4.8% QoQ and 9.1% YoY; Vehicle Lifetime Solutions +9.7% YoY but -13.2% QoQ (Q4 seasonal peak)
- Bearings & Industrial Solutions +16% YoY but -6.3% QoQ; exports rebounded 19.6% QoQ but -7.6% YoY
- New revenue mix post-restructuring: Bearings & Industrial 42%, Auto Tech 35%, Exports 14%, VLS 9%
Earnings Quality & Margins · Hardevi Vazirani (CFO)
- EBITDA margin moderated marginally YoY; absolute EBITDA grew 4.9% YoY
- Margin pressure from wage agreements, performance increments and adverse expense impacts
- Gross margins improved offsetting cost pressures; PAT margin at 12.3%
- EBIT margin 15.1%, EBT ₹305 cr; consolidated EBITDA margin 17.8% including Koovers
Working Capital, Capex & Free Cash Flow · Harsha Kadam (CEO)
- Working capital at ₹1,352 cr; management targeting 17-19% range as optimum for demand servicing
- Q1 capex of ₹173 cr vs ₹118 cr YoY; capex/sales at 7% reflecting localization focus
- Hosur greenfield plant under construction with first hall underway; production expected from CY25
- Localization increased to 77% vs ~75% prior year; focus on localizing high-specialty European imports
Consolidated Results & Koovers · Harsha Kadam (CEO)
- Consolidated revenue ₹1,873 cr including Koovers (KRSV Innovative Auto Solutions)
- Koovers posted 24.6% revenue growth in Q1 but EBITDA/EBIT/EBT still negative in ramp-up mode
- Koovers expanding footprint from South India (Bangalore, Chennai) to West and Northern regions
- Koovers positioned as strategic B2B e-commerce platform for Vehicle Lifetime Solutions growth
Closing Summary & Outlook · Harsha Kadam (CEO)
- Investments in foundation products and emerging sectors continue; customer-centricity sustaining domestic growth
- Exports showed rebound but need 2-3 more quarters to confirm sustainability
- Capex commitment intact but more judicious and agile investment decisions going forward
- Strategy of investing-to-grow and localizing in India remains strong and on the right track
In their words
We will continue to stay optimistic, yet be cautious and be more agile, continue to show the resilience that my team has demonstrated so far, and although the market is very volatile and uncertain, but certainly, we will try and play the game more smartly going forward as well.
On capex, as we had committed that in three years, we will do INR 1,500 crores and this is the third year, and we will be keeping our promise.
Globally, Schaeffler has restructured the divisions which we were having three divisions earlier, have now been split into four divisions. Considering emergence into the electric mobility play, it has become relevant and important for us to create a new business division called E-Mobility.
To check next time
What management committed to on this call, or the dates they gave.
- Free cash flow recovery after Q1 negative -₹25.6 cr; management committed to bringing it back on track
- Exports sustainability after 19.6% QoQ rebound in Q1; 'plan to maintain average through the year'
- Tractor segment recovery from -15% YoY degrowth; M&HCV bottoming out
- Hosur plant construction progress; completion targeted by end of 2024
- E-axle project milestones and phased localization progress
- Localization trajectory from current 77% to higher target
Transcript
We have not transcribed this call's recording. Read the company's transcript (PDF).
The stock after the call
| After the call | Close | Stock | Nifty 50 |
|---|---|---|---|
| Next session Fri 26 Apr 2024 | ₹3,337.00 | +1.84% | −0.67% |
| 5 sessions Fri 3 May 2024 | ₹3,776.10 | +15.24% | −0.42% |
| 20 sessions Fri 24 May 2024 | ₹4,616.90 | +40.90% | +1.71% |
From the close of Thu 25 Apr 2024, ₹3,276.75: the close before the call day (the call's time is not on file). Adjusted daily closes; the move includes everything else that happened in those sessions.
Schaeffler India's other calls
- Q1 FY27Mon 28 Sept 2026Tone: Confident
- Q1 FY27Thu 23 Jul 2026Tone: Mixed
- Q1 CY26Thu 30 Apr 2026Tone: Cautious
- Q3 FY26Wed 25 Feb 2026Tone: Confident
- Q2 FY26Mon 3 Nov 2025Tone: Confident
- Q1 FY26Fri 12 Sept 2025Tone: Mixed
- Q2 CY25Fri 25 Jul 2025Tone: Confident
- Q4 FY25Wed 30 Apr 2025Tone: Confident
- Q1 FY25Wed 24 Jul 2024Tone: Confident