Schaeffler India Q1 CY26 earnings call

Where management's figures differ from the filing

• Consolidated EBITDA margin: said 19.1% on consolidated revenue ₹2,585.6 cr; filed 18.5% on ₹2,585.64 cr (₹478.32 cr). Management consolidated margin cited 60 bps above filed; partly different standalone vs consolidated basis.

What moved the numbers, as management explained it

• Deliberate portfolio calibration in Bearings & Industrial Solutions cut QoQ revenue by 14.3% to protect margin; planned at year start, not to be extrapolated to subsequent quarters. (one-off)
• Automotive Technologies outperformance: 30.8% YoY vs 15% underlying auto production, driven by ICE clutch and engine systems plus wallet share gains; broad-based across ICE, hybrid and e-mobility.
• Gross margin improvement contributed ₹165 cr to EBITDA; partly offset by higher employee cost and lower other income.
• Aftermarket demand softened on liquidity crunch in distributor channel; flagged as seasonal and expected to correct.
• Fuel cost inflation (LPG, propane) from Middle East supply disruption; pass-through to customers just starting in Q2 with 6-18 month full recovery cycle.
• KRSV consolidated losses (PBT -19%) continued to drag consolidated results; subsidiary not at breakeven as previously targeted. (one-off)

The numbers management led with

• Automotive Technologies growth: +30.8% YoY; -1.3% QoQ in Q1 CY26
• Bearings & Industrial Solutions growth: +4.2% YoY; -14.3% QoQ in Q1 CY26
• Export growth: +32.5% YoY; +6.6% QoQ in Q1 CY26; full-year outlook 10-12%
• Capex: ₹80 crore in Q1; ₹400-500 crore guided for full CY26

Guidance on this call

What changed since the Wed 25 Feb 2026 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

• Capex spent in Q1 CY26 was ₹80 cr (timing moderation); full-year 2026 capex guided at ₹400-500 cr.
• Working capital at 17.9% of sales; continued focus on inventory and receivables management.
• Free cash flow of ₹137 cr in Q1 CY26, lower than ₹237 cr in Q1 CY25 on working capital and lower Q1 capex base.
• Consolidated EBIT margin 15.6% on ₹2,585.6 cr revenue; no specific debt or cash position disclosed on this call.

The industry, as management sees it

Management sees resilient domestic growth with positive core industrial sector momentum (cement +8.4%, steel +7.6%, electricity +2.3% in Q1). Automotive sector growth strong on GST 2.0 tailwinds. Mining remains weak. Renewable energy continues strong. Currency depreciation a concern for dollar-denominated GDP size but growth rate stability maintained. Management cautious on supply chain disruptions from Middle East geopolitical situation.

Risks management named

• Middle East geopolitical situation impacting LPG/propane/fuel imports and input costs
• Liquidity crunch in industrial aftermarket affecting distributor cash flows (seasonal but noted as sharper this year)
• Intensifying competition in industrial bearings from both MNC and local players
• KRSV subsidiary still loss-making with EBITDA margin at -13.4% in Q1
• Price recovery on commodity cost increases takes 6-18 months to fully realize

Not answered directly

• CY26 industrial demand outlook (described as crystal ball question)
• Competitive share loss specifics in recalibrated industrial segments
• Formal financial guidance for CY27/CY28

Asked for a number, answered without one

• FY27/FY28 revenue and margin guidance: We do not issue a guidance as such. We remain committed to deliver the numbers that we say we want to deliver.
• BMS average content per vehicle: Cannot be measured just with BMS; need to look at total offering including bearings, transmission, e-axle, power electronics, sensors. Component level vs system level offerings differ.
• Phase 2 e-Axle localization percentage target: No specific target; intent is to source as many child parts as possible from India and handhold suppliers to meet German engineering specs.
• Customer compensation quantum for fuel cost increases: Exploring compensation from customers; only 1.5 months of inflation so far; first batch of price increases from Q2 onwards; full recovery 6-18 months.

Every question, with its answer

1. 1. Industrial demand outlook

   Raghunandhan, Nuvama Research

   Question. On the demand side for industrial space, how do you see the outlook for CY 2026? How do you expect key categories like wind, railways, off-road to perform?

   Answer, Harsha Kadam, Managing Director and CEO. Acknowledged supply chain headwinds from Middle East situation; daily crisis management meetings in place. Does not see major concerns on delivering committed numbers for the year but requires monitoring and agility. Geopolitical situation evolving — described as a 'crystal ball question.'

   Not answered directly.

2. 2. Automotive outperformance drivers

   Raghunandhan, Nuvama Research

   Question. Automotive Technology grew 31% vs 15% underlying production growth. What specific drivers are enabling this outperformance that should continue through CY26?

   Answer, Harsha Kadam, Managing Director and CEO. Present across all technology platforms — ICE engine, hybrid, and e-mobility. All product portfolios in ICE applications did very strongly in Q1. Hybrid definitely performed well. Expects automotive sector demand trend to continue robustly going forward.

3. 3. Export growth outlook

   Raghunandhan, Nuvama Research

   Question. Last quarter exports outlook was moderate at 5-10%, but Q1 showed 30% growth. How do you see the full-year outlook given geopolitical issues?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Year-on-year growth is over 30%; QoQ growth (vs Q4 when ramping was significant) is 6.6%. Full-year run rate likely to be close to 10-12%.

4. 4. Commodity cost pressures

   Raghunandhan, Nuvama Research

   Question. Has there been a commodity cost increase? Is there automatic indexation pass-through to customers, or any other cost increases (power, freight, insurance) that could impact upcoming quarters?

   Answer, Harsha Kadam, Managing Director and CEO. Middle East situation has choked supply chains for fuels — LPG, propane, and related items India heavily imports have seen price increases, raising input costs. Actions taken: alternate sourcing routes identified, stocking up on certain items, exploring customer compensation. Described situation as 'early days' — only 1.5 months since inflationary increases; success of cost accommodation yet to be determined.

   Partly answered.

5. 5. Industrial bearings underperformance

   Mukesh Saraf, Avendus Spark

   Question. Industrial bearings have been flat to single-digit growth/decline for several quarters. Is this weak end markets, competitive intensity from localized capacity, or related to the calibration exercise mentioned?

   Answer, Harsha Kadam, Managing Director and CEO. Multiple causes contributing, not one. Localization continues (up to 80%); portfolio, market, and application mix being reviewed to deliver committed stakeholder value. Calibration is part and parcel of the game — done at beginning of Q1 so remaining quarters can sustain deliverables.

   Follow-up. Is the calibration due to pricing pressure from imports/local competition?

   Answer. Competition is intensifying activity within India. Recalibration of portfolios is necessary to sustain growth and profitability. This is done every year, but this time correction was done more concertedly at the start of the year.

6. 6. End market demand details

   Mukesh Saraf, Avendus Spark

   Question. Which specific end markets saw demand offtake decline — cement, steel, or general?

   Answer, Harsha Kadam, Managing Director and CEO. Mining sector has not seen much traction; infrastructure-related sectors (cement, steel for infrastructure) are doing well. Renewable energy still going strong. Overall mix could be better if all sectors firing on all cylinders.

7. 7. Competitive threat in e-axle

   Mukesh Saraf, Avendus Spark

   Question. Tata Auto Components has a new JV with Bosch for e-axle. Does this worry you about future product supplies to existing customers?

   Answer, Harsha Kadam, Managing Director and CEO. Competition is what it is. Focus is on navigating through while keeping strategic goals. Well placed with offerings; will continue to innovate to differentiate. Aware of marketplace developments and has a strategy to manage.

   Partly answered.

8. 8. Industrial demand slowdown

   Ankur Sharma, HDFC Life Insurance

   Question. On industrial bearings slowdown — causes include supply chain issues, pricing pressure, and higher local capacity. Is demand itself slowing down, and which specific segments?

   Answer, Harsha Kadam, Managing Director and CEO. Aftermarket side of industrial business saw demand slowdown; liquidity crunch impacted distributor community cash flows. Railways has been good; power transmission has seen no slowdown. Liquidity crunch is seasonal and typically gets corrected next quarter.

   Follow-up. On exports, given APAC/Southeast Asia affected by crude price spike, how are key geographies shaping up?

   Answer. Hardevi confirmed: key geographies are Europe, China, Southeast Asia, Americas. No dip in demand currently. Order book solid, showing minimum 10% growth. Last two years of focus on Southeast Asia business development bearing fruits now.

9. 9. BMS and content per vehicle

   Balasubramanian, Arihant Capital

   Question. Are the battery management system wins stand-alone BMS controller wins or bundled with e-axle/thermal management? What is average content per vehicle?

   Answer, Harsha Kadam, Managing Director and CEO. BMS currently sold as a stand-alone unit. Integration into e-axle may happen as e-axle business evolves. Cannot measure BMS alone — must look at full vehicle content (bearings, engine/transmission parts, BEV motor, reducer, power electronics, sensors). For ICE, component-level content is two to four digits; for BEV system-level (e-axle), content runs into five digits.

10. 10. EU FTA import risk on localization

    Balasubramanian, Arihant Capital

    Question. Execution on FY25 projections enabled Phase 2 localization. However, cheaper EU FTA imports may reverse localization on components where local suppliers lack capability. Which component categories are most at risk?

    Answer, Harsha Kadam, Managing Director and CEO. For e-mobility/e-axles, supply chain routes through China, not Europe — competitive on Indian market. Special parts like magnets still imported as domestic supply chain doesn't exist. Phase 2 localization underway; simultaneously developing local supplier base to cut imports. Both manufacturing setup and supplier development happening in parallel.

    Partly answered.

11. 11. E-axle localization trajectory

    Harshit Patel, Equirus Securities

    Question. Phase 2 e-axle localization at supplier level — where will local value addition in India reach in 3-4 years? Can you reach near 100% localization?

    Answer, Harsha Kadam, Managing Director and CEO. Intent is to source as many child parts as possible from within India. Supplier development activities in full swing; requires handholding suppliers to meet German technology specifications. Open to evaluating different business models (assembly/modules from suppliers) as domestic supplier competency grows. 100% localization unlikely in a growing economy like India with evolving technologies and initial lower volumes for new products.

12. 12. Export growth drivers

    Harshit Patel, Equirus Securities

    Question. Export growth extremely strong in Q1; upgraded full-year outlook. What has changed — new end markets, new business wins?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Exports mainly to group companies (intercompany). Better demand from group partners driving better order book. Improvement is across all regions — Europe, Americas, Southeast Asia, China. Last two years of Southeast Asia business development focus is now bearing fruit.

13. 13. Vitesco synergies

    Abhishek Ghosh, DSP Investment Management

    Question. Is the Automotive Technologies outperformance partly due to Vitesco integration benefits, or are those yet to come?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Vitesco benefits are yet to come. Q1 outperformance is purely from own ICE technology products — clutch systems and engine systems.

    Follow-up. Over the next 12-18 months, when might Vitesco synergies start showing?

    Answer. Globally seen as one entity; in India still two separate legal entities. Can leverage Vitesco competencies on electronics side. More synergies expected on e-mobility in coming quarters. No legal integration on cards as yet.

14. 14. Cost pass-through lag

    Abhishek Ghosh, DSP Investment Management

    Question. Past experience on cost pass-through to customers — how does the lag work?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Price excellence: input price increases are passed on to customers. Full recovery takes between six months to 18 months. First batch of price increases effective from Q2 onwards; full realization expected over six quarters.

    Follow-up. Was there inventory build-up at end of Q1 due to supply chain concerns?

    Answer. There has been inventory buildup; outlook for coming quarters is better.

15. 15. Localization breakdown

    Varun Jain, Dolat Capital

    Question. Bearing localization at 80% overall — what is the breakdown for spherical and cylindrical roller bearings? Can localization reach 100%?

    Answer, Hardevi Vazirani, Director of Finance and CFO. 80% is total revenue localization; within industrial space, localization is around 60%. Still room to localize more, especially in bearings. 100% unlikely as technologies evolve and initial volumes for new products cannot support dedicated lines in a growing economy.

16. 16. Shoolagiri plant timeline

    Varun Jain, Dolat Capital

    Question. Shoolagiri greenfield project — when will it begin production and what is the ramp-up pace?

    Answer, Harsha Kadam, Managing Director and CEO. Process ongoing — already contemplating building a second hall at Shoolagiri greenfield. Line transfers on track; machines have started arriving. Focus now on expediting business acquisition to utilize the capacity.

    Partly answered.

17. 17. Formal guidance policy

    Varun Jain, Dolat Capital

    Question. Does Schaeffler issue formal guidance? Can you give revenue and margin guidance for CY27 and CY28?

    Answer, Harsha Kadam, Managing Director and CEO. No formal guidance issued. Only color: management remains committed to delivering the numbers promised. Will not let investors down.

    Follow-up. Any informal color even if not a formal percentage?

    Answer. Only commitment to delivering stated numbers — no further color provided.

    Not answered directly.

18. 18. Industrial underperformance vs peers

    Viraj Kacharia, SIMPL

    Question. In times of stress, business typically moves to leaders. But industrial is underperforming despite Schaeffler's localization and cost advantage being ahead of MNC peers. How should one understand this?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Q1 industrial distribution/aftermarket is always lower — 31st March liquidity crunch causes distributors to correct inventory. Capacity utilization not impacted as exports compensate — especially industrial bearings for export. With 80% localization, plant utilization is well above 80%.

    Follow-up. What is driving profitability recalibration — who is gaining share (other MNCs, local players, unorganized)?

    Answer. Harsha: Competition is intensifying. This recalibration was a strategic decision to stay on course of delivering both top and bottom line. Analyzed market situation and competitor dynamics before deciding. Hardevi: Liquidity crunch in aftermarket is seasonal and temporary.

    Not answered directly.

19. 19. Segment growth rates and competition

    Viraj Kacharia, SIMPL

    Question. Annual growth rates by end market — aftermarket distribution, railways, wind — and competitive dynamics in each?

    Answer, Harsha Kadam, Managing Director and CEO. Strong localization has helped grow better than market in some sectors. Deliberate recalibration done in Q4 last year and Q1 this year to set course for long-term profitable growth. Capacity available but will deploy it where more competitive and more value-generative — will not chase volume at expense of profitability. Liquidity crunch in industrial aftermarket is sharper than usual this year but expected to correct.

    Follow-up. Has share gone to other MNC players or local/unorganized players in the segments where recalibration occurred?

    Answer. We invest in growing our business. Which competitor is gaining is not my concern — that analysis should be done from your side.

    Not answered directly.

20. 20. Long-term export trajectory

    Nirali Gopani, Unique PMS

    Question. Export growth has been very high over two years. For CY26 at 10-12%, is this a one-off or the beginning of higher growth trajectory?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Export depends heavily on intercompany partners who book orders and resell — not direct to end customers. As localization and capabilities in India have improved (especially bearings), more orders coming from Europe, China, Southeast Asia. Idle capacities are utilized by intercompany partners for exports. Not a deliberate export strategy — driven by order book and capacity availability.

    Follow-up. Is there a group strategy to shift manufacturing to India and source more from India over time?

    Answer. Group looks at local demand first. If local demand is better, lines are shifted to India to serve global market. India is also the best cost country. But primary focus is localization and local demand — not export-only strategy.

21. 21. CY26 capex guidance

    Rosita Fernandes, Neo Asset Management

    Question. What is the capex outlook for CY26?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Capex in range of ₹400-500 crore for CY26. This is the trend of a year before last year. Last year was rationalized. This year, investment will pick up to that range of ₹500 crores.

    Follow-up. Are total exports from the entire group company?

    Answer. Confirmed — exports are from group company (intercompany).

Topic by topic, in the order it was spoken

In their words