{"id":159055,"date":"2024-02-22T06:08:01","date_gmt":"2024-02-22T11:08:01","guid":{"rendered":"https:\/\/44.250.171.167\/?p=159055"},"modified":"2024-02-22T06:08:03","modified_gmt":"2024-02-22T11:08:03","slug":"schaeffler-india-ltd-q3-fy24-earnings-conference-call-insights","status":"publish","type":"post","link":"https:\/\/alphastreet.com\/india\/schaeffler-india-ltd-q3-fy24-earnings-conference-call-insights\/","title":{"rendered":"Schaeffler India Ltd Q3 FY24 Earnings Conference Call Insights"},"content":{"rendered":"<p><strong>Key highlights from Schaeffler India Ltd (SCHAEFFLER) Q3 FY24 Earnings Concall<\/strong><\/p>\n<ul>\n<li><strong>Industry Update<\/strong>\n<ul>\n<li>Indian economy expanded 7.6% year-over-year in Q3 2023, following strong 7.8% growth previously.<\/li>\n<li>Manufacturing sector soared 14%; construction up 7%; utilities grew 10%; mining up 10%.<\/li>\n<li>Index of industrial production contracted in Q4 2023, likely due to seasonal effect.<\/li>\n<li>Cement production grew 7.5% over previous year; coal mining up 12%.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Automotive Sector Performance<\/strong>\n<ul>\n<li>Two-wheeler exports down 20% though domestic production up 4% due to business cycle.<\/li>\n<li>Passenger vehicle production up 8% for year and 5% for Q4; commercial vehicles up 6% for Q4.<\/li>\n<li>Tractor sector declined 2% year-over-year due to weak monsoon affecting agriculture.<\/li>\n<li>Good growth seen in engine, transmission and clutch business areas.<\/li>\n<li>Sustained market share in bearing business but slower growth there.<\/li>\n<li>Commercial vehicles business seen strong traction with new product focus.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Business Highlights<\/strong>\n<ul>\n<li>Secured new businesses in both automotive and industrial for growth and balanced portfolio.<\/li>\n<li>Board proposed 45% higher dividend payout ratio at INR 26 per share vs. last year.<\/li>\n<li>Revenue grew just 3.4% in Q4 over last year amid weak export market and global slowdown.<\/li>\n<li>Exports declined 30% in Q4; full year exports down 15%.<\/li>\n<li>However, strong rebound seen in wind sector; auto seeing demand in SUV segment.<\/li>\n<\/ul>\n<\/li>\n<li><strong>New Business Wins<\/strong>\n<ul>\n<li>Won new businesses in passenger vehicles and aftermarket to enable growth.<\/li>\n<li>Offering value-add emission reduction and reliability products in passenger vehicles.<\/li>\n<li>Launched products for commercial vehicles to meet stringent emission norms.<\/li>\n<li>Growing aftermarket portfolio with e-commerce platform as growth enabler.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Financial Performance<\/strong>\n<ul>\n<li>Q4 revenue up 0.4% over previous quarter; full year growth at 5.2%.<\/li>\n<li>Q4 EBIT margin at 14.9%, down 2 percentage points versus last year.<\/li>\n<li>Full year EBIT margin at 15.7%, down from 16% in 2022.<\/li>\n<li>Q4 profit after tax 11.7%; full year at 12.6%, down 0.2% year-over-year.<\/li>\n<li>Capex spend doubled in 2023 to INR 610 crores for localization.<\/li>\n<li>Working capital holding steady at optimal 17% of sales.<\/li>\n<li>Localization levels currently at 75%; will increase further.<\/li>\n<li>Margins dropped from 39% to 37% over last 2-3 quarters largely attributed to 15% drop seen in export share.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Export Market Outlook<\/strong>\n<ul>\n<li>Exports declined due to war in Ukraine and Israel; largely exports to Europe currently.<\/li>\n<li>Exports in Q4 2023 lowest in 9 quarters at INR 211 crores.<\/li>\n<li>Hope Q4 2023 was bottoming out; optimistic of improved Q1 2024.<\/li>\n<li>Looking to expand to Southeast Asia (Indonesia, Vietnam, Thailand) to offset Europe weakness.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Industrial Sector Growth<\/strong>\n<ul>\n<li>Mixed performance in Q4 2023; some sectors like construction equipment slowed.<\/li>\n<li>But seeing rebound in wind (up 11% in Q4) and continued railways growth.<\/li>\n<li>Optimistic of demand uptick in infrastructure and allied sectors like mining, energy.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capex Allocation<\/strong>\n<ul>\n<li>Investing significantly for localization, especially on industrial side currently.<\/li>\n<li>Auto capex to increase with focus on electric mobility subsystems make in India.<\/li>\n<li>Overall capex run-rate to continue across both automotive and industrial.<\/li>\n<li>Holding to earlier guidance of INR 500 crores capex over 3 years.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Railways Business Growth<\/strong>\n<ul>\n<li>Current business in axle boxes, bearings and traction motors for electric locomotives.<\/li>\n<li>Won orders for Vande Bharat trains with upgraded specifications.<\/li>\n<li>Investing to expand capacity, engineering capabilities and testing infrastructure.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Capacity Expansion Plans<\/strong>\n<ul>\n<li>Investments on track to expand industrial capacity in Savli and new Hosur facility.<\/li>\n<li>Savli seeing phased expansions; additional production hall under construction.<\/li>\n<li>Hosur greenfield facility to commence production from Q1 2025.<\/li>\n<li>Overall capacity utilization levels seem optimal currently.<\/li>\n<\/ul>\n<\/li>\n<li><strong>Inorganic Growth Strategy<\/strong>\n<ul>\n<li>Actively looking for inorganic opportunities after Koovers acquisition.<\/li>\n<li>Strategy to pursue inorganic growth for Schaeffler India continues.<\/li>\n<li>Significant cash balance available for further acquisitions.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Key highlights from Schaeffler India Ltd (SCHAEFFLER) Q3 FY24 Earnings Concall Industry Update Indian economy expanded 7.6% year-over-year in Q3 2023, following strong 7.8% growth previously. Manufacturing sector soared 14%; construction up 7%; utilities grew 10%; mining up 10%. Index of industrial production contracted in Q4 2023, likely due to seasonal effect. Cement production grew [&hellip;]<\/p>\n","protected":false},"author":1767,"featured_media":154818,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9825,392,5753],"tags":[9506,10169,9478],"class_list":["post-159055","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-earnings-call-highlights","category-earnings","category-industrials","tag-auto-parts","tag-earnings","tag-industirals"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/alphastreet.com\/india\/wp-content\/uploads\/2023\/10\/CC_Image_1.jpg","jetpack_likes_enabled":false,"jetpack-related-posts":[{"id":142928,"url":"https:\/\/alphastreet.com\/india\/schaeffler-india-ltd-q3-fy23-earnings-conference-call-insights\/","url_meta":{"origin":159055,"position":0},"title":"Schaeffler India Ltd Q3 FY23 Earnings Conference Call Insights","author":"Praveen","date":"February 27, 2023","format":false,"excerpt":"Key highlights from Schaeffler India Ltd (SCHAEFFLER) Q3 FY23 Earnings Concall Management Update: [00:04:30] SCHAEFFLER said the cement sector saw strong traction in 3Q23, likely due to the government's infrastructure push. 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Schaeffler India Ltd reported Total Income for Q4 FY23 of \u20b91,694 Crore, up from \u20b91,568 Crore year on\u2026","rel":"","context":"In &quot;Earnings&quot;","block_context":{"text":"Earnings","link":"https:\/\/alphastreet.com\/india\/category\/earnings\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=350%2C200&ssl=1","width":350,"height":200,"srcset":"https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=350%2C200&ssl=1 1x, https:\/\/i0.wp.com\/alphastreet.com\/india\/wp-content\/uploads\/2021\/11\/Earnings-Coverage.jpg?resize=525%2C300&ssl=1 1.5x"},"classes":[]},{"id":158065,"url":"https:\/\/alphastreet.com\/india\/jsw-steel-ltd-q3-fy24-earnings-conference-call-insights\/","url_meta":{"origin":159055,"position":3},"title":"JSW Steel Ltd Q3 FY24 Earnings Conference Call Insights","author":"Praveen","date":"January 26, 2024","format":false,"excerpt":"Key highlights from JSW Steel Ltd (JSWSTEEL) Q3 FY24 Earnings Concall Steel Industry Trends Global crude steel production flat in 2023, decline in advanced economies. 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