Schaeffler India Limited, a leading player in the motion technology sector, has reported robust financial results for the third quarter, signaling a strong performance during the festive season. The company's management expressed optimism about maintaining this growth momentum into the fourth quarter.

Q3 Financial Highlights

Schaeffler India's financial performance for the quarter ended September 30 showcased significant year-over-year improvements:

The company's revenue from operations saw a substantial increase of 13.90% compared to the same quarter in the previous year, reaching ₹23,601.00 crore. This growth was primarily driven by strong performance in the Automotive Technologies segment and increased intercompany exports.

Improved Profitability

Schaeffler India's profit before tax (PBT) before exceptional items rose by an impressive 23.90% year-over-year to ₹4,129.00 crore. The PBT margin expanded to 17.50%, up from 16.10% in the corresponding quarter of the previous year, indicating improved operational efficiency and better cost management.

Management's Perspective

Harsha Kadam, Managing Director and Chief Executive Officer of Schaeffler India, commented on the results: "I am pleased to report, yet again, that we registered double-digit growth for the sixth consecutive quarter. Automotive Technologies and intercompany exports aided our performance for the quarter. Quality of earnings strengthened further, underscoring our dedication to capital and operational efficiency."

Q4 Outlook

The company's management expressed optimism about the upcoming fourth quarter, citing several factors that could contribute to sustained growth:

1. GST Reduction Impact: The recent reduction in GST rates has made vehicles, particularly small cars, more affordable. This is expected to drive demand in the automotive sector.

2. Strong Festive Season: Schaeffler India reported a robust performance during the festive period, which typically sees increased consumer spending.

3. Continued Momentum: The company anticipates that the growth momentum will continue into Q4, building on the strong performance of the previous quarters.

Conclusion

Schaeffler India's strong Q3 results and positive outlook for Q4 reflect the company's resilience and ability to capitalize on market opportunities. The consistent double-digit growth over six consecutive quarters demonstrates the effectiveness of its strategies in navigating the dynamic automotive and industrial sectors. As the company moves into the final quarter of the year, investors and market watchers will be keen to see if Schaeffler India can maintain its impressive growth trajectory and deliver on its optimistic projections.

Schaeffler India , a leading industrial and automotive component manufacturer, has announced ambitious plans to invest INR 4,500 crore over the next five years until 2030. This strategic move aims to bolster the company's manufacturing capabilities and increase its localization efforts in the country.

Localization Drive and Capacity Expansion

Schaeffler India has already made significant strides in its localization journey, investing INR 1,700 crore over the past three years. This investment has yielded impressive results, with the company achieving a localization ratio of 79%, up from 74% previously. This means that 79% of Schaeffler India's sales now come from products manufactured in its Indian plants.

Hardevi Vazirani, Director of Finance and CFO at Schaeffler India, emphasized the positive impact of localization on the company's performance: "Due to localization, the EBITDA margin has gone up. Within those investments, we have backward integration, land and buildings, a lot of margin improvement projects and relevant investments."

Capital Expenditure Plans

For the current year, Schaeffler India has earmarked a capital expenditure of INR 400.00 crore, with similar amounts planned for the following year. This forms part of the larger INR 4,500.00 crore investment plan announced by the group CEO for the period up to 2030.

Product Portfolio and E-mobility Focus

Schaeffler India's product portfolio currently comprises 60% bearings and 40% non-bearings. While the non-bearing segment has achieved a localization ratio of nearly 90%, the company sees further opportunities to improve localization in the bearings segment.

In the rapidly evolving e-mobility sector, Schaeffler India has secured a significant business win with Tata Motors for the supply of e-axles for the Tata Harrier EV. The company is implementing a phased localization strategy for this technology, with plans to increase local content gradually.

Harsha Kadam, Managing Director and CEO of Schaeffler India, explained the company's approach to e-mobility: "We very well have it in our strategy to localize going forward. We have already started to localize some part of the production process. The phase two of the localization is underway and hopefully by mid next year, we are going to now bring in the parts to start the assembly of the e-axle."

Research and Development Capabilities

Schaeffler India has significantly enhanced its R&D capabilities, particularly in the e-mobility space, following the integration of Vitesco operations. The company now operates with 910 engineers at its Bangalore R&D center, focusing on developing solutions for both global and Indian markets.

Export Performance and Future Outlook

The company's export revenues peaked at INR 1,100.00 crore in 2022, with the current mix standing at 50% to Europe, 10% to the USA, and 40% to Asia. While export growth is expected to moderate, Schaeffler India anticipates increased demand from Southeast Asian countries and Korea.

Wind and Railway Segments

In the wind energy sector, Schaeffler India is preparing for the shift towards higher capacity turbines, beyond 4 megawatts. The company is strategically gearing up to manufacture larger diameter bearings for these applications.

For the railway segment, Schaeffler is well-positioned to cater to the Indian Railways' focus on safety, reliability, and comfort. The company is particularly strong in supplying components for electric locomotives and is prepared to meet the demand for higher-performance products in passenger locomotives.

As Schaeffler India continues to invest in localization and expand its product portfolio, the company is well-positioned to capitalize on the growing opportunities in both the automotive and industrial sectors in India.