Ladies and gentlemen, you have been connected to the Schaeffler India Limited Q3 CY 2026 earnings conference call. Please stay connected. The conference will begin shortly. Ladies and gentlemen, good day and welcome to Schaeffler India Limited Q3 CY 2026 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note, the conference is being recorded. I now hand the conference over to Ms. Gauri from Schaeffler India Limited. Thank you, and over to you, ma'am.
Good morning, everyone, and welcome to Schaeffler India Limited's earnings conference call for the third quarter and nine months ended September 2026. Today we have with us Mr. Harsha Kadam, our Managing Director and Chief Executive Officer, and Ms. Hardevi Vazirani, our Director Finance and Chief Financial Officer. As always, Mr. Kadam will first take us through a short presentation on the results, and then we will open the floor for questions. Thank you, and over to you, Mr. Kadam.
Hi, good morning and a very warm welcome to this third quarter and nine-month ending business performance. Hardevi?
Good morning from my side as well.
Yeah, let me briefly take you through the presentation and I will be covering three broad areas as that is indicated on slide number three of the presentation. First will be a little light on the economy and the industry. Second will be on the business highlights, the third quarter and nine-month ending for 2026, and l astly, the financial highlights for the third quarter and nine-month ending 2026. Let me draw your attention to slide number four, where I will talk a little bit about the economy. Now, as you can see, strong performance from an economic standpoint on the Indian economy. The estimated growth was at 6.4% in the third quarter, and actually the numbers that are coming out as much stronger than that.
However, that said, in spite of the global uncertainties, the volatility that exists around us today, India still has come out stronger and the International Monetary Fund recently has upgraded its full-year growth forecast to average 7% GDP. Down on the back of a very strong, robust domestic market and also the booming digital services sector as well as the exports business. If one were to look at the index of industrial production, strong manufacturing output in the automotive industry, obviously on the back of the GST 2.0 drive, has helped in terms of meeting the targets as well, and it has reached an all-time high of 7.7% IIP as you can see there.
The growth is structurally sound and it is led by heavy manufacturing and also the utility sector as well as the power and electricity generation sector, all have done exceedingly well in the quarter. Looking at the automotive production has been one of the stellar performances. As I mentioned already, the GST 2.0 is propelling the growth, bringing in a very strong traction in demand. This is, as you can see from a Q3 year-over-year growth, standing at close 31%, 32% and a quarter-on-quarter almost at 23%. Passenger vehicles by far leading the pack with 25% growth and tractor sector too on a muted monsoon performance still at 7% growth.
A cautionary trend is on the inflation. As you can see, the consumer price index food prices have started to increase quarter-on-quarter, and that's the alarming sentiments that are prevailing on the food inflationary increases that have happened. With that, I move to the next slide, which is more focused on the sectors and what you see is the industrial sectoral performance. Very clearly on the back of the focus from the Government of India on the core infrastructure sector, we are seeing the core industrial sector such as cement, steel, doing it pretty well, registering a strong growth there as well.
Month-over-month, as you can see over the previous years in the bar chart, cement production in the country has been consistently growing and average growth rate almost around 9.3%, as you can see over the last year. Steel, on the other hand, continues to be at the same levels as last year, but marginally again growing at about 3%. Mining and coal production with a clear focus on renewable energy sector, so t he coal is something that always fluctuates. And talk about power generation. Again, as I said earlier, strong growth in energy demand in the country, which is clearly growing at about 8%, very strong focus on the renewable energy and overall the energy security that the Government of India is bringing in a focus as such.
Moving to slide number six, a little light on the Automotive Technologies sector performance. Almost all the automotive segments have performed exceedingly well. As you can see, the two and three-wheelers also have grown phenomenally and close to 3 million produced only in the month of September, has consistently shown the growth of the two and three-wheeler business in India. And f ortunately with the festival season split between October and November, some of the strongest growth months are yet to be crossed.
That said, passenger vehicles obviously have been one of the strongest performance with a year-to-date growth of almost 17%, 18% growth, which you have seen there. Again, once again, registering an all-time high production levels in passenger vehicle segment. Interestingly, the commercial vehicle also has registered a very strong 21% growth, as you can see, month after month, continuing to grow. Commercial vehicles have always been a cyclical business, and I guess we have seen the peaks of the business, but we will have to wait and watch how it pans out in 2027, b ut for the moment, this year, commercial vehicles too have registered a pretty strong growth compared to last year.
Tractors have been performing as expected, although on little bit of muted monsoons that we have been hearing about. We still have to track and watch what is going to happen to tractors in the next three months. However, so far, tractors have registered a year-to-date growth of 18% over last year, as you can see in the bar chart. That said, I move to slide number eight, where I would throw light on the business performance. On this backdrop, with all the volatility in the market, the uncertainty in the market, the challenges in the export market, what we were able to bring into the company was a revenue of INR 3,005 crore for the third quarter, which was a 27.4% growth over the same quarter last year and a 12.1% growth over the preceding quarter.
Almost all the business segments have been able to deliver a double-digit growth rate for us in the quarter. This has resulted into an EBITDA of 18.7% in the quarter of this year, compared to the preceding quarter of 19.1%. The margins did come under pressure due to the increased input costs as a result of the volatility that is existing in the market. Also the West Asia crisis, which has impacted the energy cost and the fuel prices and some of the cascading impacts that it had on the downstream operations as well. With that, our margins came under a bit of pressure, and hence you see a marginal drop from a 19.1% to an 18%.
The profit after tax too came under some challenge with 12.3% in the quarter against the 12.6% over the preceding quarter. Having got impacted with working capital increases, some that were planned and some a little unplanned, inventories build up that we had lined up in our e-mobility sector, and some challenges also on the price recoveries from our customers due to the inflationary increases, which is still work in progress for us and a lso on the account receivable situation, which we still are getting our hands around to address it in this quarter, in the coming quarter.
Obviously, with that, we did see some impact of all these coming onto the free cash flow, and we registered only INR 41 crore of free cash coming into the system, which was phenomenally lower percentage as you can see, compared to the preceding quarter as well. So t hat is something we are focused upon to recover the situation on the free cash flow in the coming quarter, and we will try and deliver in line with our expectations as well. The good news is our CapEx framework still remains strong. In fact, we did have the highest CapEx spending happening in the third quarter, which I will come to in a while.
Let me move to slide number nine. What has kept us going and the revenue growth that you see is because of a strong pipeline of new business wins. We continue to keep the focus on winning new businesses with our existing customers as well as with new customer acquisitions that we do. And a s a result, as you can see in the Automotive Technologies space, we did have a lot of business in the engine application portfolio, such as our lash adjusters, HLA RFF, the roller tappets and so on. We also had some strong business win in the clutch portfolio for the automotive application, passenger vehicles in particular, and also some of the rocker arm assemblies that go into the engine.
So we have had some significant business wins, which ensures we continue to keep our top-line growth going forward as well. Talking of the aftermarket, the Vehicle Lifetime Solutions as well, new business wins coming from the front end auxiliary drive, the timing kits, bearings portfolio, and our significant growth in the lubricants, which continues. We have also increased our focus into our INA portfolio of products that we are bringing into the aftermarket space, and this, too, is resulting in our portfolio expansion in the Vehicle Lifetime Solutions space.
Talking about the Industrial division, the Bearings & Industrial Solutions have been consistently focused on increasing and securing our market share in many of the portfolios, cylindrical roller bearings and the needle roller bearings and ball bearings in particular. Whether it is in the automotive segment or with the high-value solutions such as the actuators and bottom roller bearings in the industrial automation sector, or for that matter, even within the railway sector with our TAROL portfolio of products and the TRB portfolio of products, we have had some significant business wins.
Now, all of this put together secure the pipeline to consistently keep increasing on a revenue growth, and that's how you see us being able to deliver a double-digit growth consistently. That said, I now move to slide number 11. If one were to look at the total revenue that we generated from our operations, as you can see, INR 3,005 crore coming in the third quarter, and which was a clear 12.1% growth over the preceding quarter and a year-on-year growth of 27.4%. Now, this revenue split between the businesses that we operate in. Automotive Technologies sector clearly grew by 17.3% over the preceding quarter and 34%, 35% over the same quarter last year.
While the aftermarket Vehicle Lifetime Solutions grew 2% over the preceding quarter, has also delivered a 22% growth over the Q3 of 2025. The Bearings & Industrial Solutions also has delivered 10.2% growth over the preceding quarter, and as you can see here, 14.7% over the same period last year. Not to be left behind, our export business, which we call it as intercompany, delivered 12.7% over the preceding quarter and a 46.3% over the same period last year. What has this growth done to the mix of our portfolio? As you can see on the pie chart to the right, our Automotive Technologies still continue to be at about 37% of the revenue.
Bearings & Industrial Solutions coming in close second with 35%, followed by our export, which has cropped up from 15% in the last quarter to 17%, and our Vehicle Lifetime Solutions, which is at about 11% of the total revenue cake. With all this, we still continue as a motion technology company to keep that interesting balance of our portfolio mix. Thereby, we continue to manage the vagaries of the market environment that we operate in, and the balance helps us to us sailing in a much stronger, in spite of all the headwinds that we come across. With that, I move to slide number 12, talking a bit on the earnings quality and w hat you see here is the EBITDA performance.
And as I already shared, in the quarter, INR 562 crore coming into the quarter at an EBITDA level, which is a clear 9.4% improvement over the preceding quarter and an 18% improvement over the same period last year. I must say, reasonably good performance in spite of the challenging market environment and the headwinds that we have been facing. Now, i f one were to look at the split of where this EBITDA came in from, a gross margin improvement brought in about INR 192 crore within the quarter. This has been primarily due to the efforts of recovering some of the inflationary input cost increases that have happened, and we have been successful to recover.
Is this all? No, it is not. This is still work in progress, and we are still on the way to recover the entire increases that have happened. On the other hand, we did have some employee cost increases that have come in marginally at about INR 44 crore and some other income issues that have come in at about INR 62 crore, b ut that said, we have been able to sustain and hold on to our profit after tax, although at a decimal percentage point level, there has been a drop over the preceding quarter from a level of 12.6%. The profit after tax came down to 12.3% in the quarter, bringing in about INR 370 crore.
That said, which is also still a double-digit improvement over the preceding quarter. Year-on-year, as you can see, it's close to 21%. So while from a summary point of view, the earnings quality was impacted marginally, mainly coming on the back of the input cost increases, predominantly from fuel prices and of course, the FX foreign currency exchange rates as well. That said, I move to slide number 13. What you would see is the increase in working capital, which has gone up, and as a percentage of sales, has crept to almost 19% levels.
Yes. The reason for this is we did have some planned increases as well because our localization projects, we have to continue to service the customers, and this is something we wish to bring it back under control as soon as possible, and there's a clear focus on how do we want to address the working capital increases, and we will try to do this going forward now. That said, free cash flow, which I already mentioned at the beginning of my presentation, that yes, this is an area where we still have to do a lot more work.
In this quarter of Q4, our work is clearly cut out to keep the focus on working capital management and the free cash flow recovery as well. That said, on the CapEx, as you can see clearly in the third quarter, we have invested INR 182 crore in the third quarter alone, and this has complemented the overall performance, which were a little muted in the first two quarters. And our commitment to invest for the future growth of Schaeffler in India stays the course. That said, let me move to slide number 14, which gives you the overall indicators. And as you can see, I already talked about the 27.4% year-on-year growth and the 12.4% quarter-on-quarter, bringing in an EBITDA margin of 18.7% and an EBIT margin of 15.7%, with a profit after tax of INR 370 crore.
Our CapEx invested INR 182 crore and with a free cash flow of INR 41 crore in the quarter. Translate that to the nine-month period. What you see is a 21.4% growth over last year at a nine-month period, and with an EBITDA margin of 19% and an EBIT margin of 15.8%. Still a strong profit after tax margin of 12.5%. Our CapEx stands at a level of INR 357 crore month to date, nine-month period, with a free cash flow of INR 274 crore. Moving to slide number 15, where this slide gives you the split between the subsidiary company, KRSV Innovative Auto Solutions Private Limited, which brought in INR 83.7 crore of revenue in the quarter, with still a negative EBITDA of -17.6% and an EBIT of 19.4%.
At a consolidated level at Schaeffler India Limited, so that brings in a revenue of INR 3,089 crore in the quarter at 17.7% EBITDA and with an EBIT of 14.6%, as you can see here. With that, I come to my last slide, which is slide number 16. Our commitment to generate value to all our stakeholders is clearly still our focus, remains our focus, and we continue to deliver a double-digit growth momentum year-on-year across both our domestic and on export businesses. Yes, we did face some challenges, and there is work in progress on the margin recovery, and we clearly keep our focus to recover the situation in this quarter, fundamentally, which is coming on the back of the West Asia crisis.
Working capitals, I did already spell out that some of it is planned and some of it has happened now due to the challenges in terms of our sourcing options, which we are addressing it, and this too, we should get it under track in this quarter. And as always, we remain committed to deliver our stakeholders the results that we always plan to deliver. With that, I come to the end of my presentation. Over to you, Gauri.
We can begin with the question- and- answer session, please. Nazeem?
Yes. Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. A request to all the participants to limit their questions to the performance for the quarter and nine months ended September 2026. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Krupashankar from Avendus. Please go ahead.
Hi. Good morning, and thank you for the opportunity. My first question is on the gross margin. While it was mentioned over the previous calls as well that there will be certain price hikes which will be taken in the second half. I just wanted to get a sense around what is the percentage of cumulative cost inflation which has been recovered so far, and what are the measures taken for this further recovery in fourth quarter? That will be my first question.
Thank you for your question, Krupas hankar-j i. Gross margin is impacted largely because of the input prices, that is, the raw material price. And as a percentage of quarterly sales, it is around 1%-1.1% approximately, and 50% of it is already recovered, and 50% of it is currently under negotiation stage with several customers. Historically, we have been able to recover approximately 80%-85% of such price increases, and we are very confident that the sales teams will succeed this time as well.
Understood. The second question was on the inventory build-up. I did hear that, Harsha-ji, you did mention that the inventory build-up was due to an unplanned part in the e-mobility business. I just wanted to double-click on that and check if there are any. Is it due to any customer schedule cuts or any program delays? Any comments on that?
No, it is actually other way around. It is an unbudgeted increase in the demand for e-mobility. We had not planned that such a sharp increase will come in Q3 and Q4, but it has come now, and we have to build up the inventories for Q4 and v ery likely, these inventories will be sold out. So by December, we will see the correction.
Yeah. Understood.
Also, our input component level inputs going through the logistical challenges that we are having because of the West Asia as well. We felt it, while the market is very bullish here, so it was important for us to shore up the stocks and inventory so that we keep our operations running. The plants are at full capacity utilization levels. We have been able to sustain that only because of a little bit of—
Inventory.
—stretch on the inventory that we have taken.
Understood. Last question from my side. On the Bearings & Industrial Solutions segment, good to see that we are back on the double-digit growth. Just wanted to check, given that the previous call we had commented that there was a large industrial order, just wanted to check if that has started shipping. And also, adding on to that question, industrial automation has been much talked about over the last year or so. How large is industrial automation within the Bearings & Industrial Solutions today, and r egarding the actuators which are made, are these made locally or are they largely imported?
Yeah. Good question, Krupashankar. So the industrial automation is a pretty important sector for us, and globally at Schaeffler, we have a very strong portfolio there to gain more share into that particular sector. Yeah and India definitely is also one of the hottest market. To answer to the first part of your question today, if you see the industrial automation sector for us in India is just about 3% of the total. It is not a very big sector, b ut we see the potential to grow this sector, and one of the challenges we have faced is the portfolio of the products we are importing today. Why? Because the market also needs to give us those economies of scale for us to invest in our full production lines, which we have not done. Yeah.
But this is something that we clearly are building up in our strategy to see how do we become more competitive in the industrial automation sector, which is predominantly the machine tool industry, the robotics industry, and the humanoid industry, so t his is something that is very well on our radar, and r ight now, the bearing portfolio is something we offer, locally manufactured. However, when you talk of actuators, whether it is a rotary actuator or a linear actuator, these we still continue to import, and that is something clearly a potential opportunity for us to strategize going forward.
Got it. On that second, the large industrial order, have you started shipping that piece? What we had announced in the second quarter results.
And if you can enlighten us on exactly the large industrial order.
Sorry. Last quarter, we did mention that we have won a large order in the Bearings & Industrial Solutions business. Just wanted to get an understanding that whether we have started supplying that already or is it expected from the next quarter.
Are you referring to the exports, you mean? Is this for the export or?
Yes.
The business wins side.
The business wins, what I showed, which I show every quarter, is for the domestic market, Indian market.
Sure.
Surely those we have started to ship because we clearly have the time frames. I wouldn't be putting this up on public domain if we are not clear on secured and when the SOP starts, right? But also what you see is on the export side, as you can see, there has been a strong traction and demand, and particularly in Q3, we see export as a percentage of our total revenue going up to 17%. So that, again, we are fulfilling. These were the two main things which we commented in the last quarter as well.
Understood. Got that. I have more questions. I'll get back in the queue. Thank you.
Thank you.
Thank you. Next question is from the line of Harshit Patel from Equirus Securities. Please go ahead.
Thank you very much for the opportunity. My first question is on exports. They have grown about 46% YoY, much well ahead of the 15%-20% momentum we have indicated in the past. So could you help us with this between the rupee depreciation and the genuine volume and the new geographical allocations we would have received from the parent? Just a flavor on how this will pan out in the near future.
Just give me a minute. I'll just open the relevant file. Okay. So if we look at how the development has taken place, we see that Europe continues to lead in the order book and almost close to 45% of exports is to Europe and n ext in line is Asia- Pacific with 35%, and rest of it is China and Americas. A large portion of it is Europe and Asia- Pacific. We have seen good order book coming from Europe and Asia- Pacific, and we are able to fulfill with the capacities that are available mainly in the bearing side, so t he most exports are on the bearing side.
Understood, ma'am. Just a small follow-up on that. This quarterly run rate of more than INR 500 crore, do you think this is sustainable? Could we take this as a new baseline for our exports?
No, that's not how it is. We get the quarterly order books, and we fulfill that, because there is a 90 days frozen period. The Q4 that we are looking would be slightly lower than that, unless until some surprise comes, but a t this point of time, we would not say that it is an ongoing way of looking at it. That means it's not a permanent thing.
Understood, ma'am.
So based on the 90 days frozen period, we look at the order book.
Understood. My second question is on Bearings & Industrial Solutions. This segment grew about 15% year-on-year and also 10% sequentially. It's a clear step-up in the growth, which we used to post for the previous several quarters and I think this is also in line with your aspiration of a double-digit industrial growth. Could you help us understand which end markets drove this particular pickup, especially wind after the contract negotiation that you mentioned, I think, few quarters ago? And also, how was the performance of railways? Is this kind of double-digit growth sustainable going into next year, that is 2025? Thank you. That would be my last question.
So if we see quarter-on-quarter growth, the areas which grew are mainly two-wheelers, raw materials, wind, and distribution. There are four of those areas where the growth momentum was much above double digit, which ultimately led to overall growth of it.
Actually, if you look at the industrial sector, railways is still a lot of tender based so i t depends on which quarter the tenders do come in. So you would see ups and downs within the railway sector quarter- over- quarter. However, what we have seen is very strong traction in the core industrial sectors, which is the metal, steel, cement, all the metal industries. Wind energy was a phenomenal growth.
Obviously, again, depending on how the demand for the wind equipments from the European market and the U.S. market comes in, because 85% of the wind equipments produced in the country get exported out of the country. But for us, it is only a deemed export for us. And a lso when one looks at the industrial distribution, which is the industrial aftermarket, we have seen very strong double-digit growth there as well, clearly indicating that the core industrial sectors have performed very well in the industry as well.
Understood, sir. Thank you very much for answering my questions and all the best.
Thank you. Next question is from the line of Nitin Arora from Axis Mutual Fund. Please go ahead.
Hi, sir. Thanks for taking my question. Just on that export piece, what Harshit was asking, can you state some drivers of this export pickup? I will just set the context, because when we look at last one year, given the pressure on the auto OEMs in Europe, you would have seen recently what happened with Volvo as well. When we look at the consolidation of vendors and the auto ancillaries there are really struggling, what we get a feeler from the Indian auto. Is it something where you see Schaeffler India is getting very disproportionate business? If you can just give us some ideation here, because the growth has been sharp and your confidence also looks pretty strong on the export. Barring one line, which ma'am said that you cannot predict that this will continue or not i f you can just give a little bit more sense on that.
Yeah. So let me clarify first. Predominantly, a large part of our export, or most of it, is towards the industrial sectors—
Correct.
—and the portfolio is mainly bearings. Okay? So it is not so much on the Automotive Technologies sector, because automotive always have their own captive factories in the location where the OEMs produce. So this is mainly going towards the industrial sectors. Industrial sectors operating in Europe, in U.S., in China, and Southeast Asia, which are the four markets that we export to. Our largest, as Hardevi already answered, a large 45% of our export business goes towards Europe, and we are seeing traction demand coming from the European market, where we have started to feed that market as well. We are also seeing traction in the Southeast Asian market, so that is how we are seeing the growth. So it is not in the automotive space, but in the industrial space.
Also, I think just one more point, Nitin, that every year, Q3 usually sees a spike, because in December, somewhere around 20th, the group closes billing, and our intercompany exports are mainly towards the group companies. So Q3 is usually having a spike.
That's why my question was more on that, are they, do you see this consolidation of vendors in Europe? And my question was not towards auto industrial, my question was generic, is this consolidation happening, which is giving us that benefit, which can continue? I was asking more from that direction perspective.
We do not have any such indications, at least from our group companies.
Yeah. None of it.
Got it. Sorry. Thank you. Thank you very much, team. That was my question. Thanks.
Thank you. Next question is from the line of Varun Jain from Dolat Capital. Please go ahead.
Yeah. Hi. Good morning. So couple of questions. Firstly, if I look at your statutory reporting, the segmental EBIT margins you report, so in Q3 CY 2026 for mobility, it has gone from 13.1% to 12.2%, so they have decreased by close to 100 basis points. But in other segment, it has increased by 21.1% to 22.3%. So, this RM inflation is not hitting the Automotive Technologies and other industrial business equally?
So in mobility segment, it is hit, but lower than the B&IS. And the mobility sectors have been able to do the price recovery to a greater extent compared to the B&IS. That is why you see this.
Hello?
Varun?
Hello, Mr. Jain.
Mr. Jain, you are not audible. As there is no response, we can move to the next question. The next question is from the line of Lakshmi Narayan from Tunga Investments. Please go ahead.
Yeah. Thank you. I have two questions. Given the strong cost inflation across Automotive OE and in industrial in general, you mentioned there is a margin impact, and I just want to understand how long it will take to fully feed through the Schaeffler's margin, whether it takes a quarter or more. And, in terms of when you actually handle these engagements with OE, is it these price realizations are granted retrospectively or prospectively? And this is my first question regarding the pricing.
The second question is that if you look at the growth in the bearings division, as it has moderated, could you highlight which specific industrial sub-segments or end markets are driving this drag and then the third question is related to aftermarket. Just want to understand, what are the primary drivers behind the recent pressure in the aftermarket segment? Is it channel destocking, softer demand, or pricing dynamics? Because there has been a softness, not one quarter, but couple of quarters. These are my three questions in terms of pricing and specific things related to bearing segment weakness and the aftermarket. Thank you.
Okay. So your first question was on the cost inflation recovery and the timing difference that we have—
Yeah.
—so it takes close to four to six months for the recovery. Mostly it is retrospective effect, and the negotiations continue for four to six months, I would say. Currently, we are still negotiating, so whatever inflation erosion of margin you see, 80%-85% will be recovered. I already replied that it is retrospective. When we talk about which sectors within B&IS have grown than if I talk about YTD over YTD last year, then we have B&IS grew by 8%, close to 8%. Quarterly growth is 10%, but YTD is 8% and w ithin that, two-wheeler, off-road, power transmission, and raw materials are the high gainers.
I just saw that in spite of material costs going up, the revenues have caught up only 8%, which means that maybe on a volume basis, there have been looks like an erosion in some kind of a market share, or you have chosen to get out of some segments. Is that a fair assessment on bearing sales?
No, I think in the last two quarters, Harsha had briefed about the calibration of the wind customers where there were some price increase demands. Only that sector we have calibrated, and we are focusing only where we create value. Otherwise, we let go the business there.
Mm-hmm. Anything related to needle roller bearings where you have slowed down your expectation
No, not at all. In needle bearings, we have a growth of double digit, almost close to 20%.
Yeah. Got it. And on last question on the aftermarket, please.
On Vehicle Lifetime Solutions, we have seen double-digit increase if we look at the YTD performance. Quarter-on-quarter, there are timing differences, but we see that we will be able to maintain for full year, the double-digit growth.
Got it. Thank you so much, and come back in queue.
Thank you. Next question is from the line of Ashish from Leo Capital. Please go ahead.
Congratulations on the good set of numbers. I have two questions. The first question would be: how is the overall global demand environment for various parts of the bearing business? Is demand likely to continue to be strong over the next few years, and which segment are seeing the maximum demand momentum? That would be my first question.
As far as our business model is concerned, we supply to intercompany partners, and we get 90- 120 days of visibility and not beyond that. I will not be able to comment on the long-term growth here, honestly.
Yeah. [inaudible] , we do not deal with the customers outside. We deal with our only sister plants outside of India. We just book the orders, manufacture them, and supply them as such. So for us to track which market or which sector is doing well, it is not easy. It is challenging for us to do that. Yeah.
Based on the orders which we have received for the next 90- 120 days, which segment is driving this growth?
No, it is not the segment for us. We look at only the product portfolio, because the order comes on the product portfolio, not on the segment. So if it is cylindrical roller bearings, we get an order for this size to this size of cylindrical roller bearings. Now, who is the end customer? What is the sector? What is the application? We have no visibility to that.
Got it. But my second question would be, how does the cost of production compare the Indian operation versus some of the global manufacturing in Europe and other parts of the world? Is India meaningfully cost competitive?
My answer would be yes. Otherwise, why would they source from here?
I mean, in the past, we have seen that at least 25% cost difference is there between the cost of production in Europe and the cost of production in India.
Got it. So this growth in export is likely to continue over the long term if that's the case?
I would not say growth. If there is a strategic move by the group that they consider India to be the competitive market, and at the same time, they consider Vietnam, Indonesia, Mexico as well, so it is not that they will put all the eggs in one basket.
Got it. Thank you and good luck.
Thank you.
Thank you. Next question is from the line of Karan from IIFL Capital Services Limited. Please go ahead.
Hi, good morning, and thank you very much for the opportunity. My first question will be regarding the Automotive Technologies segment. It has been growing very fast, like almost 30%-40% YoY growth. Now, since the GST cut will be in the base, starting October onwards, do we expect the segment to slow down? If yes, how much can we expect it to grow, like 10%, 15%?
Well, that's a question I think the market will tell us what's the speed of growth, because, yes, the GST 2.0 was a kind of a kickstarter for the automotive segment. There are news that, yes, it's going to kind of find its height and stabilize there. What percentage of that? That's difficult to guess. Looking at our customers, discussing with our customers, they are predicting that this is going to go well into 2027, at least for some quarters of 2027. That's the indication. Beyond that, we do not have so much visibility.
Understood, sir. My second question will be, how much is the split between PV, CV tractors and two-wheelers? What is the sensitivity for us?
I would say, because PV obviously is a stronger play for us because on the engine component side as well as on the transmission side, power transmission and chassis side of portfolio. Commercial vehicles is something we have started to increase our presence as such. We still have some more offerings for the commercial vehicle sector, which we want to bring to the market. Also what is happening is with the talks of the BS6 now moving towards BS7, likely for 2029, the entire engine portfolio and the transmission portfolio would go through a revamp. Correct? Obviously the emission norms would drive changes, so we are gearing up for that as well. Clearly, we are pretty optimistic and bullish the way the passenger vehicle industry and the commercial vehicle sectors are doing. Correct? So I think our task is very well cut out there.
Understood, sir. Lastly, regarding our localization effort, I believe we are close to 80% and very high in Automotive, but slightly lesser in Industrial segment. So it should reflect in falling purchase of traded goods as a percentage of revenue. Right? Right now we are around 20%, 25%. So do we expect this ratio, which is the purchase of traded goods to revenue, to fall down in the coming years because of our localization drive?
That is the intention, because the traded goods, as anybody would know, is a low margin business because of the high custom duties and freights, etc . So yes, that is the intention that earlier we had kept the target of reaching 80% of localization. We have moved that target now to 85%.
Yeah. Also, I think, if I may add, it's not 25%. We are already around about below 20% of traded—
Yeah.
—goods in the quarter. There was a marginal increase compared to the preceding quarter on the traded, but I think we are already there at 20% level.
Yeah. All right. Thank you and all the best.
Thank you. Next question is from the line of Rajiv from Centrilia Infotech.
Hi, can you hear me?
Yes.
Yes.
Yeah. Hi. Congrats on a good set of numbers, sir. I have two questions. The first one is regarding Schaeffler's kind of global acquisition of Vitesco. And as you guys know, Vitesco India is a separate unlisted subsidiary now. Is there any plan of folding that into the listed company in India? From my understanding, they do a lot of power electronics and that kind of stuff, which is a very future-oriented business. As a shareholder here, you could benefit if it gets folded into this company. That's my first question. The second question is related to the shareholding of the parent. There's been some news in the market about the parent reducing the stake from around 75%, 74% that they have currently to something lower, through a share sale. Can you comment on that? Thank you.
First and foremost, there is no such plan of merger of Vitesco India with Schaeffler India Limited on the card as of now. Absolutely, there are no current discussions on that. So far as the shareholding, whatever you read in the SEBI disclosure that the promoter has planned to come down to 2/3, which means it is still keeping significant control, that means 68%, close to 67%-68%. So it is only minor monetization of shares.
I think, Ashish, this is like any shareholder who wants to monetize it, right?
Correct.
The only thing is, being the largest shareholder of the company, it is our responsibility to inform the stock exchange. It is a governance matter. We have done our responsibility. We have fulfilled our responsibility. Right. Beyond that, there is nothing that is being discussed, nor thought about, nor talked about.
They are just expressing intent of doing.
It is an intent. It is not an action that is implemented, and we as a very highly governance-focused company, we want to keep everything transparent, so we have informed the stocks. That is about it. Coming back to your previous question, I am sorry, what was the first question?
Vitesco.
The Vitesco one. Let me clarify that. Yes, as you said, these are two different companies, but that does not mean that Schaeffler India Limited is not offering the Vitesco portfolio to its business channels, and we are doing that already. So what it means is that Vitesco could still be producing the part, but Schaeffler India Limited is selling the part. So to look at it, because in front of the customer, it is one company that is doing the offering, and that is Schaeffler India Limited, and we stay that course.
Can I ask why, if Schaeffler India is selling the Vitesco portfolio? Can you elaborate a little bit on why we are not folding that company into our company? Because that would make the most sense, because otherwise, there is a possibility of two group companies competing with each other. If I am correct. Am I reading that correctly or am I wrong?
No, I think—
You are reading it wrong. Why? Because at a parent company level, it is already one company. Correct? In India, since Schaeffler India Limited is the only listed entity outside, we still have to go through this process. Now, if you ask me, when will it be done? Will it be done? I have no answers for you today. Okay? But rest assured, in terms of the market, in terms of the customer, in terms of the business, it is one company and we offer the portfolio as such.
There is no competitive—
There is no competition at all.
Competition at all.
Yeah.
Because our products that Schaeffler India Limited produces—
Complementary.
—are complementary, not—
Yeah.
—I mean, there is no competition. The products are different.
Okay, got it. Thank you.
Thank you. Next question is from the line of Varun Jain from Dolat Capital. Please go ahead.
Yeah. I think I got cut off previously. So ma'am, I had a question on the segmental margins on the statutory reporting.
Yeah, I actually answered it already, but I will repeat it. So yes, in the mobility solutions, the impact of input price increase is lower than B&IS. Plus, whatever increase has taken place within mobility, they have been largely been able to recover already. That's why you see this difference.
But ma'am, the mobility margins have fallen and the other segments, which is industrial, has risen. So that would be contrary to what you're suggesting.
So there is a sales mix within the mobility solutions, which is playing its part as e-mobility currently, it is having its developmental costs, etc. , which are going in the cost of production. There is adverse sales mix.
When it is adverse, what segments are higher weighted? What are the lower margin segments there?
The conventional are always the better margin, and the new products which are introduced are always expensive.
Yeah, got it. And ma'am, my next question was on your export piece. Intercompany exports have been very strong, but my question is that, is it because there is some plant shutdown in Europe or they have lowered the production from some plant and now India is being used as a sourcing base? Is that the reason?
No, they have not shut down the plants. There was a plan, as group had announced, that there were planned relocations to the multiple locations, Mexico, China, Vietnam, India, which has happened over a period of several years. So whatever are the capacities available at each location, they get the order book. So India gets its fair share based on the availability of the capacity after serving domestic market.
But since this plant relocation, it is like a kind of a medium-term thing, then this export momentum of 25%, 30%, 35% growth should continue for the next couple of years at least?
No, at least relocations are not happening in a big way in the recent past.
Okay. And for CY 2026, company had guided for INR 500 crore of CapEx. So in that, I think for this year you will exceed that number and c an you tell us the breakup of CapEx in E-Axle versus Shoolagiri Phase 2 versus Savli wind bearings and additional railway?
No, we will be realizing those INR 500 crore shortly, but the breakup cannot be shared.
Sure. Any guidance on what the CapEx will be like in CY 2027, CY 2028? Will it be higher than this?
I am averaging close to this number.
Okay, but can you—
Can be slightly up, but I cannot put an exact number to it because the budgets are still under preparation.
That is fine. If you cannot give the breakup, can you tell us some commissioning milestones for Shoolagiri Phase 2, Savli wind bearing expansion?
Savli as well as Shoolagiri will continue to have the construction on new halls next year as well. I can only say that.
Okay. Got it. That is all from me. Thank you and all the best.
Yeah.
Thank you. Next question is from the line of Apurva Desai from Kotak Securities. Please go ahead.
So hi team. Congratulations on a good set of numbers. So my question is just a simple follow-up on the stake sale numbers. I wanted to understand the rationale between selling that 7%-8% share. So is there a particular rationale behind it or something, or is it just a normal stake sale that is going on?
At this point of time, actually, nothing is known other than what we have already intimated to the exchanges. At this point of time, we are not aware of the intent. It is just that we know that there is an intent of monetization.
Oh.
We actually do not have even exact number of shares or percentage.
Okay. All right. Okay, thanks a lot. I will just drop back in the queue.
Yeah.
Thank you. As that was the last question for today, I now hand the conference over to Ms. Gauri for closing comments.
Thank you, everyone. Thank you for joining us today. If you have any further questions, please do reach out to me at gauri.kanikar@schaeffler.com. We now conclude this call. Thank you, and have a good rest of the day.
Thank you.
Thank you. On behalf of Schaeffler India Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.