Schaeffler India Limited reported a 17.5% year-on-year increase in revenue from operations to ₹26,814 million for the quarter ended June 30, 2026 (Q2FY26), driven by double-digit growth across its Automotive Technologies, Vehicle Lifetime Solutions, and Intercompany Exports segments. The company’s profit after tax (PAT) for the period stood at ₹3,367 million, reflecting a net profit margin of 12.6%. While top-line growth remained robust, earnings quality faced marginal pressure from geopolitical cost developments, and free cash flow declined significantly due to working capital requirements.

Financial Performance for Q2FY26

Revenue from operations for the second quarter of FY26 was ₹26,814 million, marking a 17.5% increase compared to the corresponding quarter of 2025 and a 7.0% rise over the preceding quarter. Profit before tax (PBT) before exceptional items was ₹4,525 million, up 13.7% year-on-year. The PBT margin for the quarter was 16.9%, compared to 17.4% in the same period last year and 17.0% in the preceding quarter.

Earnings before interest, tax, depreciation, and amortization (EBITDA) before exceptional items stood at ₹5,132 million, representing a 19.1% margin. This marks a slight contraction from the 19.7% margin recorded in Q2FY25. Management attributed the dip in earnings quality to increased costs linked to geopolitical developments, including fuel price volatility and currency fluctuations.

Segmental Growth and Business Developments

The revenue growth was broad-based across key segments. Automotive Technologies saw a 33.3% YoY surge, driven by new business wins in clutches for passenger vehicles and double clutches for tractors. Vehicle Lifetime Solutions grew 9.9% YoY, supported by increased market coverage through FEAD timing kits, bearings, and lubricants. Intercompany Exports & Others rose 23.9% YoY.

In the Bearings and Industrial Solutions segment, Schaeffler secured new business wins for cylindrical roller bearings, deep groove ball bearings, spherical roller bearings, tapered roller bearings, and plain bearings for the raw material sector. Additionally, momentum continued in non-road bearings for the two-wheeler segment.

Cash Flow and Working Capital Dynamics

Free cash flow (FCF) for Q2FY26 dropped sharply by 66.3% YoY to ₹965 million, down from ₹2,868 million in the previous year. This decline was primarily attributed to an increase in working capital, which rose to ₹20,291 million in Q2FY26 from ₹16,238 million in Q2FY25. Working capital as a percentage of sales increased to 17.9% for the three months ended June 2026, compared to 18.5% in the same period last year. Management indicated that the working capital increase is mainly due to inventory buildup and expects it to be managed in coming quarters.

Capital expenditure (Capex) for the quarter was ₹958 million, keeping the framework on track. For the half-year ended June 30, 2026, total Capex stood at ₹1,746 million, amounting to 3.6% of sales.

What the Numbers Show

The divergence between strong revenue growth (17.5%) and declining free cash flow (-66.3%) highlights a temporary liquidity constraint driven by inventory accumulation rather than operational inefficiency. With EBITDA margins holding above 19% despite geopolitical cost pressures, the core profitability remains resilient. The significant drop in FCF suggests that near-term cash generation will depend on inventory normalization, while the sustained double-digit growth in automotive technologies indicates strong demand visibility for the remainder of FY26.

Schaeffler India has made available the audio recording of its analyst and investor meet held on July 23, 2026. The recording, which covers the company's unaudited financial performance for the quarter and six months ended June 30, 2026, is accessible on the company's website. This disclosure was made under Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The original conference call was scheduled to discuss the operational progress following the release of results on July 22, 2026. Senior management, including Mr. Harsha Kadam – Managing Director & Chief Executive Officer, and Ms. Hardevi Vazirani – Director Finance & Chief Financial Officer, had led the presentation and the subsequent question-and-answer session.

Earnings Call Details

The disclosure was signed by Ashish Tiwari, General Counsel & Company Secretary of Schaeffler India Limited.