# 1. Financial Performance ## A. Key Figures * Revenue: ₹2,643 Cr Q4 (+26.9% YoY, +12% QoQ) · ₹9,395 Cr FY25 (+16.3%) * EBITDA Margin: 19.6% annualized (up from 18.5% prior year) · 18.4% consolidated * PAT Margin: 12.4% (up from 12% prior year) · ₹328 Cr Q4 PAT * **Free Cash Flow:** ₹254 Cr Q4 (+56% YoY) * Working Capital: 17.9% of sales (down from 19% prior quarter and YoY) ## B. Revenue Growth * **Sustained Top-Line Momentum:** Achieved double-digit growth in each quarter, with Q4 marking one of the strongest performances in the last four quarters. * **Volume and Localization Drive Performance:** Strong quarterly growth supported by improved volume, earnings quality, and capital efficiency, underpinned by rising localization efforts. ## C. Profit Margins * **Margin Expansion Despite Cost Pressures:** EBITDA and PAT margins expanded significantly on favorable product mix and operating leverage, even as employee and operating expenses rose. * **Temporary Expense Bump:** Other expenses increased due to timing-related cost true-ups and delayed billings, but no material one-offs were recorded. ## D. Cash Flow * **Robust Cash Conversion:** Strong free cash flow generation reflected improved operational efficiency and effective working capital management. ## E. Balance Sheet * **Working Capital Optimization:** Sharp improvement in working capital efficiency, now at 9% of sales, signaling better inventory and receivables control. * **Disciplined Capital Return:** Dividend of ₹35 per share aligns with stated policy of 30–50% payout ratio, balancing returns with reinvestment. --- # 2. Segment & Product Performance ## A. Key Figures * **Segment Revenue:** ₹270 Cr Automotive · ₹120 Cr Bearings & Industrial · ₹43 Cr Aftermarket * **Automotive Technology Growth:** ~42% YoY · Outpaced domestic production growth * **Wind Business Growth:** 17–18% annualized YoY · +15% QoQ (Q3 to Q4) · -4% YoY in Q4 * Koovers Revenue: ₹81.5 Cr (quarterly) · Losses widened by 18.3% (or 14.7%) ## B. Automotive Technology * **Broad-Based OEM Growth:** Strong single-digit expansion across all vehicle segments—2-wheelers, passenger, commercial, and tractors—driven by GST 0 reforms and new business wins. * **E-Axle Momentum:** Project progress ahead of 2025 targets, with localized production scaling as planned; a key growth engine alongside strong ICE-related demand. * **ICE Resilience:** Clutch and damper systems delivered very strong double-digit growth in Q4, underscoring continued relevance amid e-mobility transition. * **Emerging Applications:** Early-stage exploration of train and chain drive systems shows promise, with confidence in long-term ICE-adjacent product growth. ## C. Bearings & Industrial * **Strong Q4 Rebound:** BIS segment achieved robust year-on-year and quarter-on-quarter growth, led by railway and wind project execution. * **Broad Industrial Traction:** All non-wind/rail sub-segments posted double-digit growth in Q4, indicating improved demand and operational leverage. ## D. Aftermarket & Exports * **Export Surge:** Double-digit growth across all vehicle categories, particularly commercial vehicles (+58%), driven by Europe and Asia Pacific; now a key growth vector. * **KRSV Strategic Buildout:** Losses widened due to infrastructure investments; major setup to be completed by 2026, after which focus shifts to channel and geographic optimization. ## E. Wind & Rail Projects * **Project Timing Impact:** Q4 wind growth rebounded sequentially (+15%) on delayed project realization, despite a YoY decline; full-year growth remains healthy at 17–18%. * **Cyclicality Acknowledged:** Fluctuations in wind and rail performance attributed to tender cycles and execution timing, not underlying demand weakness. --- # 3. Order Book & Demand ## A. Key Figures * **2026 Order Book:** **In line with 2025 levels** (stable demand recovery) * **Export Growth Outlook:** **5% to 10%** in 2026 (vs. prior 35%) ## B. New Business Wins * **Diversified Wins Across Segments:** Growth driven by new program acquisitions in automotive technology, including **passenger vehicle clutches, Dual Mass Flywheels, and hydraulic cam phasers**, supported by strong market preparedness. * **Industrial & 2-Wheeler Momentum:** Significant design wins in **ball and needle roller bearings** for 2-wheelers, and multi-type roller bearings for cement and steel industries, signaling robust industrial demand. * **Forward-Looking Pipeline:** Management highlights a **strong book-to-bill ratio** and ongoing capacity investments for ICE platforms, anticipating **mid-term growth of 4% to 6%** independent of policy changes. ## C. Hybrid & E-Mobility * **Hybrid Commercialization Underway:** Series production of hybrid components has commenced in India, validating execution capability in hybrid powertrains. * **Pipeline Expansion:** Additional hybrid projects with major OEMs are in advanced stages (homologation/validation), indicating **sustained momentum beyond current revenue**. ## D. Customer Content per Vehicle * **Higher CPV in Hybrids:** Hybrid vehicles deliver **significantly higher content per vehicle** than ICE counterparts due to module-level add-ons, enhancing revenue potential per platform. * **Aftermarket Strength:** New wins in **front-end auxiliary drives and timing kits** reflect growing aftermarket demand linked to Bharat VI vehicle repair cycles. --- # 4. Capacity & Utilization ## A. Key Figures * **Capacity Utilization:** **>85%** across plants · **>80%** utilization rates maintained * **Localization Rate:** **78%** achieved in last quarter * **Capex:** **INR 375–400 Cr** planned for current year · **4% of sales** in the quarter ## B. Plant Utilization * **High Utilization, Disciplined Expansion:** Robust capacity absorption with utilization consistently above 85%, enabling strong output growth without immediate greenfield investments. * **Productivity Focus:** Ongoing incremental improvements in **OEE** are enhancing capital efficiency and delaying need for near-term capacity additions. ## C. Localization Progress * **Strategic Local Integration:** Localization at 78% reinforces cost and supply chain resilience, with targeted focus on **spherical roller bearings** for further gains. * **E-Mobility Edge:** Phase 2 of localization underway, expected to strengthen competitiveness in high-growth e-mobility segment. ## D. Capex & Expansion * **Capex Moderation for Efficiency:** Deliberate reduction in CY25 capex to optimize existing asset utilization, with spending at **4% of sales** reflecting capital discipline. * **Future-Led Planning:** Expansion plans deferred to 2026, aligned with prior investment cycles; long-term capex to be evaluated over **2- to 3-year horizon**. * **Clutch Line Relocation Complete:** U.K. to Hosur shift finalized, though full revenue ramp-up delayed by setup and inventory constraints. --- # 5. Supply Chain & Partnerships ## A. Supplier Recognition * **Headline:** Schaeffler recognized with **three customer awards** and **two CSR awards** in Q4 2025, reflecting strong cross-divisional performance and social commitment. * **Headline:** Voith honored Schaeffler for **zero quality complaints over 12 months**, a milestone underscoring excellence and reliability in a multi-year partnership. * **Headline:** Eicher Motors and Mahindra & Mahindra recognized Schaeffler for **consistent on-time deliveries**, highlighting leadership in supply chain transformation and engine systems execution. ## B. Vitesco Integration * **Headline:** Vitesco fully merged under the Schaeffler brand, with integration yielding tangible results in **new business wins** and expanded OEM engagement. * **Headline:** Combined hardware-software capabilities driving traction in **Battery Management Systems (BMS)**, with designs approved by **multiple BEV OEMs** and offerings scaling to new customers. ## C. Import vs Local Mix * **Headline:** Import dependency persists due to **lack of local suppliers**, with localization strategy to be reevaluated post-FTA for long-term cost competitiveness. --- # 6. Risks & Competitive Pressures ## A. Key Figures * **Regulatory Impact:** **0.8%** of results impacted by special expenses (Labour Code) * Inflation: 2.2% average in 2025 · 0.8% in Q4 (historic low) * Duty Rates: **7.5–15%** on raw material imports from EU · **0–2%** on exports to Europe · **7.5%** on imports from EU ## B. Competitive Positioning * **Sustained Differentiation:** Schaeffler India maintains a **distinct competitive advantage in the domestic market**, a key global differentiator. ## C. Regulatory & Trade Developments * **FTA Upside Potential:** India-EU trade agreement could lower **import duties on raw materials and components**, boosting input cost efficiency. * **Limited Export Impact:** No material benefit expected on **European exports** due to already minimal **0–2% duty rates**; **D. S. exports remain negligible** with no near-term FTA clarity. * **Cost Absorption:** Special expenses from Labour Code reforms, equivalent to **8% of results**, were fully absorbed without margin leakage. ## D. Input Cost Environment * **Disinflation Trend:** Broad inflation eased to **2%** in 2025 with a Q4 low of **8%**, though **core inflation pressures persist** due to elevated precious metals prices. --- # 7. Guidance & Outlook ## A. Key Figures * Index of Industrial Production: 5% (latest quarter) · 3.8% (prior quarter) ## B. Growth Projections * **Favorable Macro Backdrop:** India’s 2025 growth momentum underpinned by resilient domestic demand, structural reforms, and integration into global supply chains, supported by monetary easing and a weaker exchange rate. * **Consumption Recovery Broad-Based:** Urban demand strengthened on tax cuts, while rural consumption showed sustained improvement, driving real private consumption recovery. * **Sustained Growth Ambition:** Company targets **midterm double-digit growth**, backed by strong fundamentals and strategic focus on pipeline generation and cost management. ## C. Breakeven Timeline * **Path to 2027 Breakeven:** Contingent on improved financials via **enhanced service and product mix**, operational efficiency, and post-investment cost relief.