Schaeffler India Q3 FY26 earnings call

Where management's figures differ from the filing

• EBITDA margin: said 19.1% Q4 CY25 standalone (Q3 FY26); filed 17.8% consolidated. Standalone vs consolidated basis; consolidated absorbs exceptional items and Labour Code ~0.8% impact flagged in the call.

What moved the numbers, as management explained it

• Volume growth across automotive (PVs +8%, 2W +8.6%, CV +8.4%, tractors +17.2%) and industrial sectors drove Q4 revenue +26.9% YoY to ₹2,643 cr.
• Gross margin expansion from blend of mix and volume effects lifted Q4 EBITDA to ₹505 cr, partly offset by higher employee and operating expenses.
• Labour Code regulatory change absorbed ~0.8% of margin in Q4; exceptional impact already reflected in results. (one-off)
• Wind and rail sectors posted weaker growth in Q4 on tender and project timing, while other industrial sectors posted double-digit growth.
• Consolidated Q4 reflects exceptional items; management highlighted EBIT before exceptional items of 15% at consolidated level. (one-off)

The numbers management led with

• Capex 2026 plan: Over INR 500 crores (stepping up to 3-year average)
• Free cash flow Q4: INR 254 crores (up 56% YoY)
• Capacity utilization: Above 85% across all plants
• S&P DJSI ranking: Ranked #1 in India and #7 globally; CSA score 76/100 (up 40 points)

Guidance on this call

Guided on earlier calls, and what was filed

Filed figures are summed from the company's own quarterly results for the whole period (EBITDA excludes other income); where one sits against what was guided is arithmetic, not a judgement.

By business

Balance sheet, capex and funding

• Free cash flow ₹254 cr in Q4 (+56% YoY); FCF positive at consolidated level.
• Working capital 17.9% of sales in Q4 vs ~19% YoY and QoQ.
• CY25 capex ~₹375-400 cr (~4% of sales), moderated vs prior years.
• CY26 capex to step up to ~₹500 cr (average of 2022-2024 level).
• Capacity utilization >85% across all plants with continuous OEE/productivity improvements.
• Board recommended ₹35/share dividend, within 30-50% of net income payout ratio target.

The industry, as management sees it

Management sees a strong rebound in Indian automotive and industrial sectors riding on GST 2.0 reforms, with all core sectors (cement, steel, mining, energy) in positive growth and 2W/PV/CV production posting high single to double-digit growth; exports expected to moderate to 5-10% in 2026 on softer Europe/Asia-Pacific demand.

Risks management named

• EU FTA benefits depend on item-level duty announcements not yet notified (currently 7.5-15% on raw material imports)
• RoDTEP export incentive reduction could pressure export margins
• KRSV (Koovers) subsidiary remains loss-making; breakeven timing not committed
• Wind and railway project-based revenues are tender/timing dependent and can cause quarterly volatility

Not answered directly

• Hosur clutch line revenue potential in CY26
• RoDTEP export incentive quantification for CY25
• KRSV breakeven timeline (2027 target not formally committed)

Asked for a number, answered without one

• RoDTEP export incentive for CY25: Said Investor Relations would reach out with the number; not provided on the call.
• Clutch line revenue potential after UK-to-Hosur relocation: Said full realization will be seen in 2026 but will not be disclosing the numbers; order books being relocated.
• Shoolagiri plant investment breakdown: Gave total capex of ₹375-400 cr for CY25 and ~₹500 cr for CY26 but did not break out by plant.

Every question, with its answer

1. 1. Other expenses and one-offs

   Mukesh Saraf, Avendus Spark

   Question. On other expenses rising to ~INR 400 cr this quarter, is there any lumpy item to call out?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Other expenses in total increased by INR 72 cr QoQ. Within this, certain services and true-up of costs for which bills of previous quarters were received in Q4 — timing rather than a one-off.

2. 2. Competitive intensity in industrial bearings

   Mukesh Saraf, Avendus Spark

   Question. With the competitor's new large plant for SRB/CRB in industrial segment, are you seeing increased competitive intensity in iron & steel, cement on SRB/CRB bearings given rising localization?

   Answer, Harsha Kadam, Managing Director and CEO. Strategy is to keep increasing localization — reached 78% last quarter. Will continue the journey, especially in spherical roller bearings where potential is significant. On competition, we acknowledge their presence but our focus is on executing our own growth strategy.

   Partly answered.

3. 3. Hybrid powertrain ramp-up

   Mukesh Saraf, Avendus Spark

   Question. Auto Tech growth is very strong. Have you started seeing benefits from hybrid supplies? Is there a notable uptick in activity on hybrid powertrains from OEMs?

   Answer, Harsha Kadam, Managing Director and CEO. Already have a hybrid business win with series production and supplies from our Indian plant. A few more hybrid projects with key customers are in homologation/validation. Increased OEM interest in hybrids is evident alongside BEVs — both will coexist. Content per vehicle is higher in hybrids because we deliver at module/subsystem level and as add-on to ICE technology.

   Follow-up. Is content per vehicle (CPV) higher in hybrid versus ICE?

   Answer. Yes, hybrid solutions are at module/subsystem level with higher value, and they are additive to ICE technology — both factors raise CPV.

4. 4. Vitesco integration & BMS wins

   Abhishek Ghosh, DSP Mutual Fund

   Question. Where are we on the Vitesco integration journey? Are benefits already accruing in terms of new wins or margin profile?

   Answer, Harsha Kadam, Managing Director and CEO. Merger of Vitesco is concluded; customers see one brand — Schaeffler. Have new business wins in BMS (Battery Management System) for BEVs with a couple of OEMs; designs approved. Vitesco portfolio is complementary to our mechanical offerings and we are on a stronger footing to provide higher value-add.

5. 5. Export growth drivers

   Abhishek Ghosh, DSP Mutual Fund

   Question. Exports have shown strong growth — is this base catch-up? Any particular region or segment (e.g., wind) driving it?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Own exports have grown from all regions, mainly Europe and Asia-Pacific. Our wind sales are not in exports — they are domestic sales to customers who then export the equipment.

   Follow-up. What is the wind business doing — is it strong?

   Answer. Harsha added: own wind business grew 17-18% YoY full year; Q4 over Q4 was ~4% but Q4 over Q3 was 15% — strong quarter performance. Wind is booked as domestic sale since customers export the equipment.

6. 6. Capex pacing and capacity constraints

   Abhishek Ghosh, DSP Mutual Fund

   Question. Utilizations are north of 80% and capex moderated in CY25. Given parent has rolled out a 5-year strategy, how to look at capex over 2-3 years? Will growth be compromised by capacity constraints?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Capacity utilization over 85%; plants can still absorb higher utilization via productivity and OEE improvements. Capex was moderated in 2025 deliberately. In 2026 stepping up to ~3-year average over INR 500 cr to begin with; the numbers announced by Mr. Rosenfeld (Group CEO) cover 2026-2030 and capex will scale up from 2026.

7. 7. EU FTA impact

   Mahesh Bendre, LIC Mutual Fund

   Question. With India-EU trade agreement expected shortly, will any benefit accrue to Schaeffler India?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Benefits expected specifically on import of raw materials and child parts. Currently paying 7.5-15% duty on raw material imports but new rates not announced. As a group will benefit on finished goods imports too, but rates pending. On exports to Europe, duty already 0-2% so no major change.

   Partly answered.

8. 8. Wind and railway Q4 performance

   Balasubramanian, Arihant Capital

   Question. Wind grew 17-18% but Q4 was sluggish due to project timing. Is the Q4 improvement just the delayed projects coming back? What is the update on the railway side?

   Answer, Harsha Kadam, Managing Director and CEO. Railway and wind posted lower numbers in Q4 (still positive) compared to other sectors like power transmission, raw materials, industrial automation, aftermarket that registered very robust growth. Some sectors are tender-based with timing issues — that's the case for railways and wind energy.

   Follow-up. On KRSV, losses have widened (~14.7-18.3% margins). What are the milestones for CY26 to get on track for 2027 breakeven? When will focus shift from top-line to profitability?

   Answer. Hardevi: in 2026 dark store/hub infrastructure is in place; growth in those will moderate and focus shifts to channel and product mix — three channels (wholesalers, retailers, workshops) and product mix by geography. Harsha added: last 2 years invested in infrastructure; now have a clear breakeven plan. Q4 performance shows progress on profitability as well.

   Partly answered.

9. 9. KRSV (Koovers) profitability path

   Balasubramanian, Arihant Capital

   Question. On KRSV, what are the specific milestones for CY26 to get on track for 2027 breakeven? When will focus shift from top-line growth to profitability?

   Answer, Hardevi Vazirani, Director of Finance and CFO. In 2026, dark store and hub infrastructure build is largely complete; growth in those will moderate. More focus will be on channel mix (wholesalers, retailers, workshops) and product mix by geography. Financial parameters will start improving from here.

   Partly answered.

10. 10. Shoolagiri plant and capex plan

    Raghunandhan N. L., Nuvama Research

    Question. On the Shoolagiri plant, how is the capacity ramp-up expected to pan out? Can you indicate investment in CY25 and CY26 and capacity utilization in 2026?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Capacity utilization over 85% in all plants. CY25 capex INR 375-400 cr. Will scale up in 2026 in line with 2022-2024 levels, continuing to invest in capacities for relevant products and new technologies.

    Partly answered.

11. 11. Clutch line UK to Hosur relocation

    Raghunandhan N. L., Nuvama Research

    Question. On the relocation of the clutch line from U.K. to Hosur, has this reflected in Q4 revenue? Revenue potential in CY26?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Relocation is done but it takes time to lay out complete lines and see the realization. Harsha added: work in progress. Full realization in 2026; not disclosing specific numbers as order books are being relocated based on stock availability at different locations.

    Not answered directly.

12. 12. e-Axle ramp-up

    Raghunandhan N. L., Nuvama Research

    Question. On e-Axle, how is the progress? How do you see the ramp-up next year given a large order book?

    Answer, Harsha Kadam, Managing Director and CEO. Exceeded the 2025 numbers we had projected — encouraging. Started investing in phase 2 localization of production, going to plan. With customer platforms winning in market, seeing more traction for new platforms and engaging with other customers. New wins to be communicated in future earnings calls.

    Partly answered.

13. 13. Export demand & RoDTEP incentive

    Raghunandhan N. L., Nuvama Research

    Question. How do you see demand conditions in key export geographies? With the RoDTEP incentive reduction by half, can you quantify RoDTEP export incentives for CY25?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Order book for 2026 is in line with 2025. Demand came back in 2025 but moving forward, given Europe and Asia-Pacific growth projections, export growth will moderate to 5-10% in 2026. On RoDTEP quantification — Investor Relations will reach out separately.

    Not answered directly.

14. 14. Bearings & Industrial Solutions growth

    Harshit Patel, Equirus Securities

    Question. BIS posted healthy YoY and QoQ growth after muted quarters. What changed in Q4? Was it just the railway/wind timing? Will the run rate accelerate further?

    Answer, Harsha Kadam, Managing Director and CEO. Q4 saw double-digit growth in all other sectors in the industrial space — clear indicator of positive market demand traction. Weaker performance was from wind and rail; all other sectors registered very strong performance.

    Partly answered.

15. 15. Automotive Technologies growth and ICE outlook

    Harshit Patel, Equirus Securities

    Question. Auto Tech grew 42% YoY, well ahead of industry. Was the majority of growth from e-Axle ramp-up? Should we expect continued elevated growth?

    Answer, Harsha Kadam, Managing Director and CEO. E-mobility growth is strong as customer models succeed; will continue building competitiveness via phase 2 e-axle localization. However, ICE engine applications (clutch, damper, engine and transmission) also registered strong wins. Strong book-to-bill going forward; will continue investing in ICE capacities as midterm growth still expected. Train systems and built-in chain drives are also being focused on. Q4 growth in ICE was strong double-digit.

16. 16. EU FTA confirmation

    Sagar Parekh, Renaissance Asset Managers

    Question. On the EU FTA, on exports there is no impact as rates are 0-2% — confirming. On imports, if duties come down from 7.5% we may see more imports from EU — correct?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Absolutely. On imports, lower duties could make EU imports more competitive; on exports, no major change given low existing duties.

    Follow-up. Anything on the U.S. FTA — is there some momentum?

    Answer. Hardevi: nothing as such. Harsha: U.S. FTA clarity still to come on commodity/item level; exports to U.S. are not very large for us, so the impact would mainly be on import duties into India rather than U.S. duties on Indian exports.

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In their words