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, Financial) 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. β 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. β 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. β 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. β 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. β 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. β 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. β 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. β Hardevi Vazirani, Director-Finance & CFO
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
