Schaeffler India Limited is a premier manufacturer and supplier of high-precision components and systems for automotive and industrial applications. As a prominent motion technology company, it operates through three core business divisions: Automotive Technologies, Vehicle Lifetime Solutions, and Bearings and Industrial Solutions. The company's product portfolio is engineered for precision and longevity, featuring critical components such as hydraulic cam phasers, clutches, dual-mass flywheels (DMF), and a wide array of bearings including Deep Groove Ball Bearings (DGBB), Needle Roller Bearings (NRB), and Tapered Roller Bearings (TRB). Schaeffler India serves a diverse customer base across various sectors, including passenger vehicles, commercial vehicles, tractors, two-wheelers, and heavy industries like raw materials and off-road equipment. The company strategically leverages localization to enhance operational efficiency and margins, positioning itself as a key partner to major manufacturers while also catering to the aftermarket through its Vehicle Lifetime Solutions division. With a clear commitment to sustainability and operational excellence, Schaeffler India aims to be a leader in its field, driving value through innovation and disciplined capital allocation.

Official Website: http://www.schaeffler.co.in/

• Revenue Performance: The company demonstrated robust top-line growth. For the full year (12M) 2025, revenue from operations reached 93,953 million INR, a significant 16.3% increase from 80,763 million INR in 2024. This momentum accelerated in the fourth quarter (Q4) of 2025, with revenue of 26,431 million INR, marking a 26.9% year-over-year (YoY) growth compared to Q4 2024 and a 12.0% quarter-over-quarter (QoQ) growth from Q3 2025.

• Profitability and Margin Expansion: Earnings quality showed marked improvement. Full-year 2025 EBITDA (before exceptional items) grew to 18,376 million INR from 14,969 million INR in 2024, with the EBITDA margin expanding from 18.5% to 19.6%. Similarly, Profit After Tax (PAT) for 2025 stood at 11,962 million INR, up from 9,777 million INR in 2024, with the PAT margin increasing from 12.1% to 12.7%. In Q4 2025, the company posted an EBITDA of 5,056 million INR and a PAT of 3,280 million INR.

• Cash Flow Generation: Free Cash Flow (FCF) generation was exceptionally strong. For the full year 2025, FCF was 10,010 million INR, a more than four-fold increase from 2,239 million INR in 2024. This was driven by better operating margins and efficient working capital management. Q4 2025 FCF was 2,540 million INR, a 56.0% YoY increase.

• Dividend Payout: The company has a consistent history of rewarding shareholders. The Board has recommended a dividend of 35 INR per share for the year 2025, up from 28 INR in 2024. The dividend payout ratio for 2025 is 46%, which is in line with the company's stated target payout ratio of 30% to 50% of annual standalone net income.

• Consolidated Performance: The consolidated results for Q4 2025, which include the subsidiary KRSV Innovative Auto Solutions Private Limited, show total revenue of 27,242 million INR and an EBITDA margin of 18.4%. The subsidiary currently operates at a loss, slightly diluting the standalone entity's stronger margin profile.

Summary: Schaeffler India delivered a strong financial performance in 2025, characterized by double-digit revenue growth, notable margin expansion across all profitability metrics, and exceptionally robust free cash flow generation.

• Diversified Business Model: The company operates across three distinct segments, which provides a balanced revenue stream. In Q4 2025, the sales mix was Automotive Technologies (35%), Bearings & Industrial Solutions (39%), Vehicle Lifetime Solutions (11%), and Intercompany Exports & Others (15%). This diversification mitigates risk from downturns in any single sector.

• High-Precision Engineering: Schaeffler's product portfolio consists of technologically advanced and critical components like hydraulic cam phasers, Dual Mass Flywheels (DMF), and specialized bearings. These are not commodity products, indicating a high barrier to entry and strong technical expertise.

• Strategic Focus on Localization: The presentation explicitly states that operating margins improved due to "localization benefits." This strategy reduces dependency on imports, mitigates foreign exchange risk, and improves cost competitiveness, which is a significant advantage in the Indian market.

• Strong Customer Integration: The nature of the company's "new business wins" and "business nominations" suggests deep integration with its original equipment manufacturer (OEM) clients. Securing long-term contracts, such as the win for LV Clutches with a six-year life, points to a sticky customer base and reliable future revenue.

Summary: The company's unique strength is derived from its diversified portfolio of high-precision products, a strategic commitment to localization that enhances profitability, and deep-rooted relationships with key customers.

• Macroeconomic Resilience: The Indian economy showed sustained resilience in 2025. GDP growth remained robust, estimated at 7.0% in Q4 2025. The Index of Industrial Production (IIP) also exhibited strong growth, supported by policy reforms and capital expenditure momentum, reaching 5.0% in Q4 2025. Consumer Price Index (CPI) inflation eased throughout the year, supporting monetary stability.

• Robust Automotive Sector Growth: All key automotive segments, which are primary end-markets for Schaeffler, performed exceptionally well. For the full year 2025, production growth was strong:

• Tractors: 17.2% growth, driven by rising farmer income and agricultural infrastructure focus.

• Passenger Vehicles (PVs): 8.4% growth, fueled by infrastructure investments and evolving consumer preferences.

• Commercial Vehicles (CVs): 7.8% growth, supported by infrastructure spending.

• Two and Three-Wheelers: 8.6% growth, aided by GST reductions and support for electric mobility.

• Core Industrial Sector Performance: While the overall growth in core sectors for YTD 2025 was modest at 2.7%, key industries like Steel and Cement showed steady monthly production volumes. Electricity generation also remained stable, indicating sustained industrial activity that supports the company's industrial division.

Summary: Schaeffler India is operating in a favorable macroeconomic and industry environment, characterized by resilient economic growth and strong, broad-based demand across all its key automotive and industrial end-markets.

• Broad-Based Divisional Growth: Growth was not concentrated in one area but was visible across all business segments. On a YoY basis for Q4 2025, the revenue growth was:

• Automotive Technologies: 41.6%

• Vehicle Lifetime Solutions: 16.6%

• Bearings and Industrial Solutions: 13.1%

• Intercompany Exports & Others: 49.2%

This indicates a comprehensive execution of strategy across the entire business.

• New Business Wins: The company secured several key business contracts, which are direct drivers of future growth. These include:

• New business wins for hydraulic cam phasers and continued momentum in PV Clutches & DMF.

• Business nominations for needle bearings and lift mast rollers in the off-road segment.

• Wins for various roller bearings (CRBs, SRBs, TRBs) in the raw material sector.

• New business wins for DGBB and NRB in the high-volume two-wheeler segment.

• Market Penetration and Portfolio Expansion: In the aftermarket segment (Vehicle Lifetime Solutions), the company is actively expanding its product range and market penetration. It also continues to gain volume from new product launches and secure deals for kits in the PV segment.

Summary: The company's double-digit growth is fueled by strong, balanced performance across all its divisions, complemented by a steady stream of new business acquisitions and strategic initiatives to deepen market penetration.

• Advanced Automotive Components: The business wins in hydraulic cam phasers and the continued momentum in clutches and DMF for passenger vehicles highlight a significant opportunity to capitalize on the trend towards more sophisticated engine and transmission technologies.

• Aftermarket Expansion: The focus on portfolio and range extension in the Vehicle Lifetime Solutions division presents a clear opportunity to capture a larger share of the high-margin aftermarket business. The win for clutches with a six-year life cycle suggests a strategy to offer durable, premium products.

• Industrial Sector Diversification: Securing business nominations and wins in diverse sectors like off-road vehicles (lift mast rollers) and raw materials (various roller bearings) demonstrates the opportunity to reduce dependency on the automotive cycle and tap into growth from broader industrial and infrastructure development.

• Two-Wheeler Segment: New business wins for Deep Groove Ball Bearings (DGBB) and Needle Roller Bearings (NRB) in the two-wheeler segment open up a high-volume market, providing a significant avenue for growth.

Summary: Schaeffler India is well-positioned to capitalize on opportunities across advanced automotive technologies, the industrial sector, and the aftermarket through targeted business wins and portfolio expansion.

• Disciplined Capital Expenditure (Capex): The company's Capex for the full year 2025 was 3,836 million INR. This is a reduction from the 6,911 million INR spent in 2024, but the presentation notes that this realization is "as planned." This suggests the company is moving from a heavy investment phase into a phase of sweating those assets, which is reflected in its strong cash flow generation. Capex as a percentage of sales was 4.1% for 12M 2025.

• Efficient Working Capital Management: Working capital was managed effectively throughout the year. As a percentage of sales, it stood at 17.9% for the full year 2025, a notable improvement from 19.0% in 2024. This discipline contributed directly to the strong free cash flow performance.

Summary: The company is executing its capital allocation strategy with discipline, moderating its capex as planned and managing working capital efficiently to maximize free cash flow.

• Vision to Lead: The company has a stated ambition to build the "leading Motion Technology Company," indicating a long-term focus on technological leadership and market dominance.

• Commitment to Performance: The summary slide emphasizes that the company is "Entering 2026 committed to deliver results." This signals a continued focus on execution and meeting performance targets.

• Driving Shareholder Value: A core part of the future plan is to "drive long term stakeholder value." This is supported by the continued focus on improving financial and operating metrics, as demonstrated by the 2025 results.

Summary: The company's future plans are centered on achieving market leadership in motion technology by maintaining a sharp focus on operational execution and the creation of long-term shareholder value.

• Consistent Margin Improvement: The company has successfully expanded its operating margins. The EBITDA margin for the full year 2025 improved by 110 basis points to 19.6% from 18.5% in 2024. The EBIT margin also improved by 90 basis points to 16.1%.

• Key Drivers of Profitability: The improvement in margins is attributed to a combination of factors:

• Volume Gains: Higher sales volumes allowed for better absorption of fixed costs.

• Capital Efficiency: Disciplined capex and effective asset utilization contributed to profitability.

• Strategic Localization: A key driver mentioned for margin improvement was the benefits derived from localizing production, which reduces costs and supply chain risks.

• Cost Absorption: The company successfully absorbed a -0.8% impact during Q4 2025 due to regulatory changes related to the labor code, demonstrating its ability to manage external cost pressures while still improving overall profitability.

Summary: Schaeffler India has demonstrated its ability to systematically improve margins through a combination of volume growth, capital efficiency, and a strategic focus on localization, even while absorbing new regulatory costs.

• Recognition for Excellence: In Q4 2025, the company received multiple awards and accolades that underscore its operational and supply chain excellence. These include a "Certificate for timely component supply," an "Award for Best Supplier," and a "Certificate for Best Supplier," indicating strong relationships with its customers.

• Leadership in Sustainability (ESG): The company has achieved a top-tier global ranking in sustainability. According to the S&P CSA Dow Jones Sustainability Index Scores for 2025:

• Its overall score more than doubled to 76/100 from 36/100 in 2024.

• It is ranked 1st in India and 7th Globally in the "Machinery and Electrical Equipment" industry segment.

• The company is in the 98th percentile among 402 companies assessed, showcasing its elite performance in Environmental, Social, and Governance (ESG) dimensions.

• Community and Social Responsibility: The company was also recognized for its social initiatives, receiving awards for "Doing good for Women & Inclusion, Employability & Livelihood" and for "Excellence in Water Management."

Summary: Beyond its strong financial performance, the company has established itself as a leader in operational excellence and sustainability, earning top industry awards and achieving globally recognized ESG rankings.