Schaeffler India Ltd Q1 FY27 Earnings Call: Raises Export Growth Guidance to 10-12%, Auto Technologies Surges 33% YoY

Schaeffler India Ltd held its Q1 FY27 earnings call on July 22, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Revenue Growth Across All Segments

• Revenue of Rs.2,681 crores — 17.5% higher YoY and 7% higher than the preceding quarter (Q1 FY2026-2027).
• EBITDA of Rs.513 crores (margin 19.1%) — 19% better YoY and 6.3% better than the preceding quarter.
• Profit after tax of Rs.337 crores (margin 12.6%) — against Rs.320 crores in Q2 FY2025-2026.
• Consolidated revenue including KRSV subsidiary — Rs.2,760 crores with EBITDA margin of 18.5% and EBIT margin of 15.2%.
• Working capital increased to Rs.2,029 crores — driven by planned inventory build-up to manage geopolitical and supply chain risks.
• Free cash flow impacted — by higher working capital and input cost pressures; management expects recovery in H2 FY2026-2027.

Auto Technologies Surges 33%; Exports Outperform at 28%

• Automotive Technologies revenue grew 33.3% YoY in Q1 FY2026-2027 — conventional ICE business up ~20% with remainder from e-mobility; company gained 3.6% market share while passenger vehicle production dropped 8% sequentially.
• Exports grew ~28% YoY in Q1 FY2026-2027 — driven by inter-company allocations and capacity utilization at Savli, with double-digit demand from Europe, Asia Pacific, and China; FX tailwind from US dollar billing in Americas and Asia Pacific.
• Industrial segment grew ~5% YoY in Q1 FY2026-2027 — impacted by wind energy timing and contracting; core metal industries (steel, aluminum, cement) drove strong traction on infrastructure growth; management aspires to double-digit growth.
• Aftermarket (VLS) growth slowed to ~10% in Q1 FY2026-2027 — down from >20% average over prior three years due to capacity constraints at Hosur plant that forced prioritization of OEMs over aftermarket volumes.
• Sales mix for the quarter — Automotive Technologies 35%, Bearings & Industrial Solutions 35%, Vehicle Lifetime Solutions 12%, Exports 17%.
• Automotive bearing business remains under pressure — due to commoditization; management focusing on cost competitiveness and localization to drive future recovery.

Input Cost Inflation and Wage Hike Impact Margins

• Other expenses as% of sales rose to 15.4% in Q1 FY2026-2027 from 15.1% in Q2 FY2025-2026 — driven by fuel price increases (full quarter impact) and air freight costs incurred to manage production constraints.
• Average wage increase of 10% implemented — not recoverable from customers; management expects price corrections in H2 FY2026-2027 through FX indexation and steel price indexation to partially offset cost headwinds.
• Gross margins expanded in Q1 FY2026-2027 — pricing mechanism varies by segment; automotive OEMs use indexation but not all commodities are covered; dialogue ongoing for LPG and propane cost increases with expected positive traction in H2 FY2026-2027.
• Customer reimbursement unlikely — for fuel and air freight costs; volumes are absorbing these cost increases.
• Key risks cited by management — input cost inflation, FX impact, freight cost increases, and potential monsoon impact on tractor demand.

Capacity Expansion and New Business Wins Underway

• New business wins secured across all segments — including double-clutch systems for tractors, overrunning alternator pulleys, and large-value industrial bearing orders.
• CAPEX for FY2026-2027 originally guided at Rs.400-500 crores — Rs.175 crores spent in H1; H2 expected to close at Rs.250-300 crores; total likely ~Rs.500 crores; break-up: automotive Rs.120 cr, automotive technologies Rs.170 cr, balance in bearing & industrial; maintenance CAPEX ~10% of total.
• KRSV (Kuers) subsidiary revenue of Rs.79 crores in Q2 FY2026-2027 — EBITDA remains negative as focus is on scaling operations; management cited "break-even on EBITDA and cash flow expected in 2029."
• Kuwer standalone EBITDA margin shift — from 13.4% to 17.3%, impacted by Rs.5.6 crores sales cutoff accounting change and Rs.3 crores founder's bonus provision (impacts are negative).
• Hosur plant capacity expansion underway — addressing capacity constraints that forced OEM prioritization over aftermarket volumes; developing local supply chain capacity.

Cautious Guidance Amid Geopolitical Risks

• Export growth guidance for FY2026-2027 raised from 5-10% to 10-12% — management now cautious on future guidance due to geopolitical disruptions but aspires to sustain ~15-20% growth momentum.
• Export cap maintained at ~20% of total revenue — for natural hedging against imports, despite solid order book for FY2026-2027.
• Industrial non-mobility segment posted double-digit growth — power transmission grew ~8%; railways lagged (tender-based); wind energy revenue declined due to ongoing global contract negotiations.
• CAPEX remains on track — focused on expanding manufacturing capacities to sustain double-digit growth.
• Free cash flow recovery expected in H2 FY2026-2027 — as working capital normalizes and cost headwinds are partially offset by price corrections.
• Monsoon impact on tractor demand flagged — as a potential near-term risk to the automotive technologies segment.