Schaeffler India Q1 FY27 earnings call

Where management's figures differ from the filing

• Revenue YoY growth: said +17.5% YoY (standalone ₹2,681 cr); filed -39.0% YoY (consolidated ₹2,760.55 cr). Gap not addressed on call; management cited share gains and strong segments while filed YoY shows a sharp decline.
• EBITDA margin: said 19.1% (standalone, ₹513 cr); filed 18.1% (consolidated, excl. other income, ₹498.98 cr). Difference reflects standalone vs consolidated basis and KRSV drag at subsidiary level.

What moved the numbers, as management explained it

• Volume: 17.5% YoY revenue growth led by Automotive Technologies (+33%) and Exports (+24%); Bearings & Industrial grew ~5% with VLS at +9.9%.
• Cost: LPG/propane, oil prices, freight, IT and a ~10% wage hike from new Labour Codes weighed on margins; gross margin improvement contributed ₹147 cr to EBITDA.
• Mix: Shift toward Automotive Technologies (e-mobility) and Exports supported growth; VLS moderated due to OEM priority on Hosur capacity.
• Other: FX had a mixed effect - positive tailwind on exports (non-Europe USD billing) but adverse impact on import costs and reported bottom line.
• Accounting: KRSV introduced sales-cutoff policy (₹5.6 cr revenue deferral) and founders' bonus provision (₹3 cr), affecting subsidiary margins. (accounting)
• Working capital: Planned inventory build lifted working capital to ₹2,029 cr, reducing free cash flow; expected to normalise in H2 FY27.

The numbers management led with

• Q2 CY26 revenue from operations: ₹2,681 crore (+17.5% YoY, +7% QoQ)
• Working capital: ₹2,029 crore in Q2 CY26
• Automotive Technologies YoY growth: +33% YoY in Q2 CY26 (conventional +20%, e-mobility the rest)
• Export growth: +24% YoY in Q2 CY26; 28% YoY in H1 CY26
• CY26 capex plan: ₹500 crore for CY26 (~₹170 cr automotive tech, ~₹120 cr automotive, rest B&IS; ~10% sustaining)

Guidance on this call

What changed since the Thu 30 Apr 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

• Working capital ₹2,029 cr in Q1 FY27, up on planned inventory build for specific customer accounts; management has a plan to manage it going forward.
• Capex ₹175 cr spent in H1 FY27 (per analyst note); capex framework on track with orders placed for machinery.
• Remaining capex of ₹500 cr to be consumed over CY26; split ₹170 cr in Automotive Technologies and balance in B&IS; sustaining capex ~10% of total.
• Free cash flow lower in the quarter on working capital build and reduced earnings; recovery expected in H2 FY27.

The industry, as management sees it

Management views the macro environment as mixed: GDP growth slowing from 7.8% in Q1 CY26 to 6.5-7% in Q2; CPI inflation rising to 3.9% on food and manufacturing input costs. Core industrial sectors (cement, steel, power transmission) are strong on the government infrastructure push, but coal production is declining as renewable energy expands. Automotive was mixed: two/three-wheelers and CVs strong, but PV production fell 8% MoM in June even while growing 15.7% YoY. Tractor outlook is monsoon-dependent.

Risks management named

• Industrial segment growth remains sluggish; wind energy revenue dip due to ongoing contract negotiations
• Hosur plant capacity constraint is prioritising OEMs over VLS / aftermarket
• Tractor demand sensitive to monsoon performance
• Input cost (LPG, propane, freight, IT) increases yet to be recovered from OEMs
• Wage Code-driven ~10% wage increase absorbed by the company, not passed through
• FX impact on margins, partly natural-hedged by intercompany exports
• Planned inventory build-up weighing on free cash flow; recovery expected in H2 CY26

Not answered directly

• Inter-segment pricing specifics between automotive OEMs, aftermarket and intercompany exports (declined to reveal details)
• Industrial segment recovery timeline to double-digit growth (no specific date)

Asked for a number, answered without one

• Industrial segment return to double-digit growth: Aspiration to get industrial business to double-digit growth rate; will continue to monitor challenges in some sectors; no timeline given.
• Pricing mechanics across segments: OEMs use commodity indexation (Labour Code not on list); intercompany at arm's length with true-up at year-end; aftermarket specifics not disclosed.
• Aftermarket growth rate target: Capacity constraints at Hosur plant being addressed; OEM demand currently prioritised over VLS; supplier base development in progress; no number given.
• Quantum of input cost recovery from OEMs: In dialogue on LPG/propane; some positive traction expected in H2 FY27 on price correction and steel indexation; wage hike not subject to customer recovery.

Every question, with its answer

1. 1. Industrial segment growth trajectory

   Harshit Patel, Equirus Securities

   Question. On the industrial segment - it has recovered well after the dip in the last quarter but growth is still soft at ~5% YoY. Is the portfolio recalibration now complete? Roughly how much revenue did you consciously let go? And when does BIS return to double-digit growth?

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam said core infrastructure sectors grew well and the company grew ahead of the market. Power transmission performed strongly. There was an impact from wind energy due to timing and contracting processes, expected to recover. Increased focus on distribution and aftermarket in industrial. The aspiration is to make industrial business also reach double-digit growth, acknowledging its own set of challenges in some sectors.

   Partly answered.

2. 2. Exports momentum and guidance

   Harshit Patel, Equirus Securities

   Question. On exports - H1 grew 28% YoY, well above the FY26 guidance of 10-12% (raised from 5-10% at Q4). What is sustaining this momentum? Is it more intercompany allocation? China Plus One within Schaeffler? Rupee depreciation? H2 visibility? Will you revise CY26 export guidance? Has there been any change in geography mix between Europe, US, SEA, China?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Hardevi Vazirani said the growth is mainly from intercompany allocations, with capacities being built up in India (especially Savli) to serve group locations worldwide. Demand from all regions (Europe, Asia Pacific, China) has been in double digits. FX is also favourable for US dollar billing regions though Europe is rupee-billed. Will be careful in future guidance due to geopolitical disruptions; will try to sustain 15-20% growth. Harsha Kadam clarified there was no prior 10-12% growth guidance - the wish was to cap exports at about 20% of revenue, not a growth target. The cap is for natural hedging against imports.

3. 3. Aftermarket / VLS growth sustainability

   Raghunandhan N. L., Nuvama

   Question. On the aftermarket side - peers grow at high single digits, Schaeffler has done 20%+ for last 3 years. But Q2 growth has come down to 9.9-10%. With revenue already at a large size, how do you see this segment performing? Can the growth reach higher levels via increased product portfolio?

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam acknowledged the observation. He cited capacity constraints as the reason, which are being addressed. In a high-growth situation, OEMs end up getting priority and VLS takes second preference, which the company does not want. Capacity gap is being addressed; supply chain capacities of local suppliers also need to catch up. Ongoing work to align supply chain with both OEM and VLS demand.

   Partly answered.

4. 4. Cost pass-through and opex details

   Raghunandhan N. L., Nuvama

   Question. On the cost side - many auto component suppliers face commodity pressure with lag in pass-through. How are you managing? Are OEMs responding positively to the minimum wage hike? Would compensation come in the next quarter? Are the elevated other expenses one-off or should they continue?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Hardevi Vazirani broke down other expenses: Q2 last year was 15.1% vs Q2 this year 15.4% (0.3% increase) covering fuel price increases (Q1 had only one month of March vs Q2 full quarter impact) and Hosur plant capacity constraints leading to air freight on incoming and outgoing material. Customers unlikely to reimburse; expect productivity measures, VA/VE to absorb. Wage increase has been ~10% on average; not subject to customer recovery. What is recovered from customers is FX indexation and steel price indexation, where traction is expected in H2.

5. 5. Pricing mechanism across segments

   Mukesh Saraf, Avendus Spark

   Question. On pricing - gross margins expanded QoQ. How does pricing work across segments? Intercompany exports, OEMs, aftermarket? Aftermarket hikes presumably easier. How does pricing work across these end markets?

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam explained automotive OEMs work on an indexation mechanism; not all commodities are on the list. Labor Wage Code is not on the list, so getting compensation is not easy. In dialogue with OEMs on LPG/propane input cost increases (commodities not in indexation list). Expect positive traction in H2. Hardevi Vazirani added intercompany exports are at arm's length pricing principles; transfer prices true-up done at end of December per OECD guidelines. Harsha Kadam declined to reveal pricing specifics between segments.

   Not answered directly.

6. 6. Industrial segment market share and order wins

   Mukesh Saraf, Avendus Spark

   Question. Industrial Bearings within non-mobility has remained at ~₹400 crore for 6-8 quarters. Have market shares remained stable and is it just an end market issue? Also, on the large order wins in Bearings & Industrial Solutions, would that change the trajectory?

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam said the non-mobility sector on the OEM side has performed well - core metal industries, steel, aluminium, cement have strong traction. Industrial automation is doing good but could do better. Power transmission had ~8% growth in Q2. Distribution side has more opportunities and is on the radar. Hardevi Vazirani stressed non-mobility has grown double-digit in non-mobility. Mukesh acknowledged the point and moved on.

   Partly answered.

7. 7. Industrial sub-segment performance

   Himanshu Singh, Baroda BNP Paribas

   Question. On the industrial segment - which sub-segments have performed/improved over the last quarter? How do you see the underperforming segments ramping up to help double-digit growth?

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam said strong growth was in core metal industrial sectors and power transmission. Lag sectors included railways (tender-based, not much growth QoQ) and wind energy (going through contract negotiations with some customers - these are global contracts). Wind energy revenue dipped in Q2 but expected to resolve over time.

8. 8. Automotive Bearings recovery path

   Himanshu Singh, Baroda BNP Paribas

   Question. On order wins - Bearings & Industrial Solutions got the highest order wins. But automotive is currently not doing so well. When do you see automotive coming into the growth trajectory? That should ideally help grow in double digits.

   Answer, Harsha Kadam, Managing Director and CEO. Harsha Kadam said Automotive Bearings business is more commoditized. The company carefully chooses where it is competitive and works on strength. From a top-line perspective moderated numbers may be seen, but focus is on securing the bottom line. A prudent and conscious effort. Trying to address through cost competitiveness and product localization. Once these are addressed, will be able to get back strongly in the Automotive Bearings business.

   Partly answered.

9. 9. KRSV Koovers margin and breakeven

   Varun Jain, Dolat Capital

   Question. On KRSV - Koovers - QoQ revenue was ₹79-80 crore but EBITDA margin worsened from 13.4% to 17.3%. Why and when is breakeven expected on EBITDA and cash flow?

   Answer, Hardevi Vazirani, Director of Finance and CFO. Hardevi Vazirani said there are two special Q2 items: (1) introduction of accounting policy on sales cutoffs, adjusting revenue recognition of ₹5.6 crore, impacting EBITDA; (2) started provision for founders' bonus to be paid next May over 3 years, ~₹3 crore impact. Breakeven expected in 2029.

10. 10. Automotive Technologies growth drivers

    Varun Jain, Dolat Capital

    Question. On automotive - very strong run rate in first 2 quarters, 31% and 33.3%. What is driving this strong run rate? Is it e-Axle? Is it sustainable in H2?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Hardevi Vazirani said Auto Tech overall YoY growth is 33.3% in Q2. Conventional business grew ~20%, with remaining growth from e-mobility. Harsha Kadam added that PV Q2 production was down 8% QoQ but the company did not drop 8% - actually improved market share and grew business. Hardevi confirmed 3.6% growth vs market -8%. Varun summarised that this is more market share gains than vehicle volume growth - both Harsha and Hardevi confirmed.

11. 11. CY26 capex deployment and breakup

    Varun Jain, Dolat Capital

    Question. Capex for CY26 was pegged at ₹400-500 crore; ₹175 crore done so far. That would put ₹250-300 crore in H2. Will that be there? And breakup of capex between maintenance, automotive, industrial bearing localization and Shoolagiri plant?

    Answer, Hardevi Vazirani, Director of Finance and CFO. Hardevi Vazirani confirmed the remaining amount of the ₹500 crore capex will be consumed in the rest of the year, with orders already placed for machinery for capacity and localization. Breakup: ₹170 crore in automotive technologies and ~₹120 crore in automotive, with the remaining in B&IS. Annual maintenance/sustaining capex is very small, maybe 10% of capex.

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In their words