Schaeffler India Ltd (BOM:505790) Q3 2024 Earnings Call Highlights: Strong Revenue Growth Amid ...

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Fri, Oct 25, 2024, 1:00 AM 4 min read

Revenue Growth: 12.1% year-on-year increase for Q3 2024.
EBITDA: 382 Crores with an 18.5% margin for Q3 2024.
Profit After Tax: 247 Crores with an 11.9% margin for Q3 2024.
Cash Flow: Positive cash flow of 100 Crores in Q3 2024.
Capex: 207.6 Crores invested in Q3 2024; cumulative capex of 536 Crores for the nine-month period.
Industrial Solutions Growth: 5% growth over the preceding quarter and 13% year-on-year growth.
Automotive Technologies Growth: 0.8% growth over the preceding quarter and 10.7% year-on-year growth.
Vehicle Lifetime Solutions: 2.3% decline over the preceding quarter but 7% year-on-year growth.
Export Business: 14.6% decline over the preceding quarter but 17% year-on-year growth.
Consolidated Revenue: 2,116 Crores for Q3 2024; 6,096 Crores for the nine-month period.

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Release Date: October 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Schaeffler India Ltd (BOM:505790) received five prestigious awards, including the Zero PPM award from Toyota and recognition from Skoda Volkswagen for sustainability initiatives.
The company reported a 12.1% year-on-year increase in sales revenue, demonstrating strong performance despite a challenging market environment.
Schaeffler India Ltd saw significant growth in the industrial solutions segment, with a 13% year-on-year increase, driven by sectors like renewable energy and railways.
The company maintained a strong EBITDA margin of 18.5% and generated a positive cash flow of 100 crores in the quarter.
Schaeffler India Ltd continues to invest in growth opportunities, with a focus on new business development and portfolio expansion in both automotive and industrial sectors.

Negative Points

The automotive sector showed sluggish demand, with a mere 0.7% growth in passenger vehicles and a 16% decline in commercial vehicles.
Export business faced challenges, particularly in the European market, resulting in a 14.6% quarter-on-quarter decline.
The company experienced a dip in EBITDA margin compared to the previous year, attributed to increased employee costs and the absence of one-time income from the previous year.
High inventory levels in the passenger vehicle segment could impact production numbers in the coming quarters.
The company's new venture, KRS Innovative Auto Solutions, has yet to break even, with profitability expected only by the end of 2026.

Q & A Highlights

Q: Can you provide an update on the order won last year and its commercialization status? A: The validation process is ongoing, with vehicles being tested across the country. The launch is expected in the first quarter of 2025. Harsha Kadam, CEO and Managing Director

Q: How is the integration with Tesco progressing, and what are the plans for Schaeffler India? A: The functional integration is complete globally, but further details will be shared once we receive direction from headquarters in Germany. Harsha Kadam, CEO and Managing Director

Q: What is the outlook for exports, given the recent decline? A: The decline was mainly in the European market due to market challenges. We are focusing on Asia, China, and America, where we did not see a drop. Hardevi Vazirani, Director-Finance & CFO

Q: Can you provide insights into the margins of the automotive technologies and industrial segments? A: We cannot disclose specific margins, but the aftermarket business and exports generally bring in better margins due to foreign exchange effects. Harsha Kadam, CEO and Managing Director

Q: What is the status of the Hosur Greenfield project, and what products will be manufactured there? A: The project is on track to start production early next year, focusing initially on transmission components like clutches, with plans to scale up for new products, including EV components. Harsha Kadam, CEO and Managing Director

Q: How do you see demand trends in the passenger vehicle and tractor segments for the second half of the fiscal year? A: The passenger vehicle segment may remain muted due to high inventory levels, while the tractor segment shows signs of slow growth, aided by a good monsoon. Harsha Kadam, CEO and Managing Director

Q: Can you elaborate on the performance of the industrial bearing segment, particularly in railways and wind energy? A: We saw strong growth in wind energy and railways, with good traction in raw materials and two-wheelers. The distribution business also performed well. Harsha Kadam, CEO and Managing Director

Q: What is the roadmap for the turnaround of KRS, and when do you expect it to break even? A: We aim for KRS to break even by the end of 2026, with cash generation starting in 2027. We are expanding operations and market reach to achieve this. Hardevi Vazirani, Director-Finance & CFO

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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