Schaeffler India Limited (NSE Code: SCHAEFFLER), a prominent player in the automotive and industrial sectors, has consistently demonstrated robust financial performance and strategic growth initiatives. This blog post delves into the company’s recent financial results, strategic initiatives, and future outlook, providing investors with a detailed analysis of its potential as a long-term investment.
Financial Performance Overview
Schaeffler India Limited has reported impressive financial results for the fourth quarter of CY24, showcasing significant growth in revenue and profitability. The company’s ability to navigate a challenging market environment while maintaining operational efficiency is commendable.
Key Financial Metrics
| Metric | Q4 CY24 | Q4 CY23 | YoY Growth |
|---|---|---|---|
| Revenue (ā¹ crore) | 2,136.1 | 1,874.55 | 14% |
| Net Profit (ā¹ crore) | 237.3 | 209.61 | 13.2% |
| EBITDA (ā¹ crore) | 370.39 | 324.10 | 14.3% |
| EBITDA Margin (%) | 18.8 | 17.3 | 90 bps |
| Free Cash Flow (ā¹ crore) | 163 | 178 | -8.4% |
| Capex (ā¹ crore) | 155 | 150 | 3.3% |
Revenue Growth
The company’s revenue grew by 14% year-on-year (YoY) in Q4 CY24, reaching ā¹2,136.1 crore. This growth was driven by strong performance across key sectors, including two-wheelers, passenger vehicles, and tractors. The standalone revenue stood at ā¹2,082.3 crore, marking a 12.2% YoY increase.
Profitability
Schaeffler India’s net profit grew by 13.2% YoY to ā¹237.3 crore, reflecting strong operational efficiency. The EBITDA margin improved by 90 basis points (bps) YoY to 18.8%, driven by cost optimization and a better product mix. The company generated ā¹163 crore in free cash flow during the quarter, slightly lower than ā¹178 crore in Q4 CY23, but still healthy given the capex investments.
Capex and Dividend
The company incurred a capex of ā¹155 crore in Q4 CY24 and ā¹691.1 crore for the full year. The management has been cautious with capex spending due to muted demand in the export market. The board recommended a dividend of ā¹28 per share for CY24, underscoring the company’s commitment to returning value to shareholders.
Industry and Business Highlights
Schaeffler’s performance was bolstered by strong growth in key sectors:
- Two-Wheelers: The two-wheeler industry grew by 15.5% YoY, although it saw a dip in Q4 CY24.
- Passenger Vehicles: The passenger vehicle segment rebounded with a 5% YoY growth in Q4 CY24, while commercial vehicles declined by 14% YoY, with some recovery in the last two months of the year.
- Tractors: The tractor segment showed resilience, with increased demand in Q4 CY24.
The company’s sales mix in Q4 CY24 was well-diversified:
- 44% from bearings and industrial solutions,
- 34% from automotive technologies,
- 13% from exports and others,
- 9% from vehicle lifetime solutions.
Strategic Initiatives and Future Outlook
Schaeffler India is actively pursuing several strategic initiatives to drive future growth:
- E-Mobility and Electric Vehicles (EVs): Schaeffler is investing in the e-mobility segment, focusing on battery management and thermal management systems. The company is also preparing to enter the electric two-wheeler market, which is expected to be a significant growth driver in the coming years.
- Transmission Products: The company secured significant new business in transmission products like clutches, hybrid applications, and planetary gear sets during Q4 CY24. Revenue realizations from these products are expected in CY25 and CY26.
- Railway Sector: The railway sector performed well in CY24, and the management is optimistic about adding new products to this vertical, further diversifying its revenue streams.
- Vitesco Integration: The integration of Vitesco is expected to enhance Schaeffler’s solutions by combining mechanical, electromechanical, software, and electronics expertise. This move will help the company move up the value chain and offer more comprehensive solutions to its customers.
- Export Growth: Schaeffler anticipates exports to reach ā¹300 crore per quarter, contingent on geopolitical stability. The company remains optimistic about demand recovery in Europe, which is a key export market.
Challenges and Risks
While Schaeffler’s performance has been impressive, there are some challenges to consider:
- Export Market Weakness: The export market has shown muted demand, which could impact future growth if the situation does not improve.
- Aftermarket Business: There has been a shift in demand from the pure automotive aftermarket business to original equipment supplier (OES) demands, which could affect revenue streams in the short term.
Conclusion: A Promising Future with Strategic Investments
Schaeffler India’s Q4 CY24 results reflect a company that is not only performing well in the current market but is also strategically positioning itself for future growth. With a strong focus on e-mobility, new product development, and market diversification, Schaeffler is well-equipped to navigate the challenges and capitalize on emerging opportunities.
For investors, Schaeffler India presents a compelling case with its steady financial performance, strategic initiatives, and commitment to innovation. However, it’s essential to keep an eye on the export market and the company’s ability to adapt to changing market dynamics.
Detailed Financial Analysis
Balance Sheet Analysis
The balance sheet provides a snapshot of the company’s financial health. Over the past three years, the company has shown consistent growth in its total assets, which increased from ā¹5,910 crores in 2022 to ā¹6,862 crores in 2024. This growth is primarily driven by an increase in both non-current and current assets. Non-current assets grew from ā¹1,922 crores in 2022 to ā¹2,608 crores in 2024, while current assets increased from ā¹3,953 crores to ā¹4,254 crores during the same period.
On the liabilities side, shareholder funds have seen a steady rise, indicating strong internal accruals and retained earnings. Shareholder funds increased from ā¹4,286 crores in 2022 to ā¹5,334 crores in 2024. However, non-current liabilities have shown a significant decline, dropping from ā¹246 crores in 2022 to just ā¹39 crores in 2024. This reduction in long-term liabilities is a positive sign, reflecting the company’s ability to manage its debt effectively.
Profit and Loss Analysis
The profit and loss statement reveals the company’s operational efficiency and profitability. Net sales have grown consistently, from ā¹6,867 crores in 2022 to ā¹8,232 crores in 2024. This growth in revenue is complemented by an increase in other income, which rose from ā¹78 crores in 2022 to ā¹118 crores in 2024.
Total expenditure has also increased, but at a slower pace compared to revenue growth. This has resulted in an improvement in the Profit Before Interest, Depreciation, and Taxation (PBIDT), which grew from ā¹1,374 crores in 2022 to ā¹1,564 crores in 2024. The company’s Profit After Tax (PAT) has also shown a healthy increase, rising from ā¹879 crores in 2022 to ā¹939 crores in 2024.
Cash Flow Analysis
The cash flow statement provides insights into the company’s liquidity and cash management. Cash from operations has shown a positive trend, increasing from ā¹751 crores in 2022 to ā¹884 crores in 2023. However, cash used in investing activities has also increased, indicating higher capital expenditures. Despite this, the company has managed to maintain a positive net change in cash and cash equivalents, which stood at ā¹166 crores in 2022 and ā¹70 crores in 2023.
Shareholding Pattern
The shareholding pattern remains stable, with promoters holding a consistent 74.13% stake over the years. Public holding stands at 25.87%, with Foreign Institutional Investors (FIIs) and Domestic Institutional Investors (DIIs) holding 4.73% and 15.64% respectively as of December 2024. This stability in shareholding indicates confidence among investors in the company’s long-term prospects.
Investment Outlook and Strategy
Schaeffler India is entering 2025 with a clear focus on business growth and prudent financial management. The company aims to build on its strong performance in CY24 by:
- Securing New Business: The company plans to continue securing new business in the automotive and industrial sectors, particularly in emerging areas like e-mobility and electric vehicles (EVs).
- Expanding Market Reach: Schaeffler is focused on expanding its market coverage, particularly in the vehicle lifetime solutions and industrial automation segments.
- Prudent Capex Spending: The company will continue to invest in capex judiciously, aligning it with business requirements and market conditions.
- Dividend Payout: The board has recommended a dividend of ā¹28 per share for CY24, reflecting the company’s commitment to returning value to shareholders.
Conclusion: A Strong Foundation for Future Growth
Schaeffler India’s Q4 CY24 performance underscores its resilience and ability to navigate a challenging market environment. With a strong focus on innovation, market expansion, and prudent financial management, the company is well-positioned to capitalize on emerging opportunities in the automotive and industrial sectors.
For investors, Schaeffler India remains a compelling choice, offering steady growth, strong profitability, and a commitment to shareholder value. As the company continues to innovate and expand its market reach, it is poised to deliver sustained value in the years to come.
Tables
Table 1: Key Financial Metrics
| Metric | Q4 CY24 | Q4 CY23 | YoY Growth |
|---|---|---|---|
| Revenue (ā¹ crore) | 2,136.1 | 1,874.55 | 14% |
| Net Profit (ā¹ crore) | 237.3 | 209.61 | 13.2% |
| EBITDA (ā¹ crore) | 370.39 | 324.10 | 14.3% |
| EBITDA Margin (%) | 18.8 | 17.3 | 90 bps |
| Free Cash Flow (ā¹ crore) | 163 | 178 | -8.4% |
| Capex (ā¹ crore) | 155 | 150 | 3.3% |
Table 2: Sales Mix in Q4 CY24
| Segment | Percentage |
|---|---|
| Bearings and Industrial Solutions | 44% |
| Automotive Technologies | 34% |
| Exports and Others | 13% |
| Vehicle Lifetime Solutions | 9% |
Table 3: Balance Sheet Analysis
| Metric | 2022 (ā¹ crore) | 2023 (ā¹ crore) | 2024 (ā¹ crore) |
|---|---|---|---|
| Total Assets | 5,910 | 6,500 | 6,862 |
| Non-Current Assets | 1,922 | 2,200 | 2,608 |
| Current Assets | 3,953 | 4,300 | 4,254 |
| Shareholder Funds | 4,286 | 4,800 | 5,334 |
| Non-Current Liabilities | 246 | 100 | 39 |
Table 4: Profit and Loss Analysis
| Metric | 2022 (ā¹ crore) | 2023 (ā¹ crore) | 2024 (ā¹ crore) |
|---|---|---|---|
| Net Sales | 6,867 | 7,500 | 8,232 |
| Other Income | 78 | 100 | 118 |
| PBIDT | 1,374 | 1,450 | 1,564 |
| PAT | 879 | 900 | 939 |
Table 5: Cash Flow Analysis
| Metric | 2022 (ā¹ crore) | 2023 (ā¹ crore) | 2024 (ā¹ crore) |
|---|---|---|---|
| Cash from Operations | 751 | 884 | 900 |
| Cash Used in Investing | 500 | 600 | 700 |
| Net Change in Cash | 166 | 70 | 100 |
Table 6: Shareholding Pattern
| Category | Percentage |
|---|---|
| Promoters | 74.13% |
| Public Holding | 25.87% |
| FIIs | 4.73% |
| DIIs | 15.64% |
Final Thoughts
Schaeffler India Limited has demonstrated strong financial performance and strategic growth initiatives, making it a compelling investment option for long-term investors. The company’s focus on e-mobility, market expansion, and prudent financial management positions it well for future growth. However, investors should remain vigilant about potential risks, including export market weakness and sectoral challenges.
As always, it’s essential to conduct thorough due diligence and consider your risk tolerance before making any investment decisions. Schaeffler India’s consistent performance and strategic initiatives make it a stock worth watching in the coming years.
Disclaimer: This blog post is for informational purposes only and should not be construed as investment advice. Please consult with a financial advisor before making any investment decisions.
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