SCHAEFFLER Q2 FY27 Earnings Call: Exports Surge 46% YoY, Guides Rs. 500 Cr Capex

SCHAEFFLER held its Q2 FY27 earnings call on October 27, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Strong Top Line, But Margins and Cash Flow Slip Sequentially

• Revenue of Rs.3,005 Cr, +27.4% YoY and +12.1% QoQ — almost all segments delivered double-digit growth despite market volatility and export-market challenges; consolidated (incl. KRSV) revenue was Rs.3,089 Cr at 17.7% EBITDA and 14.6% EBIT.
• EBITDA of Rs.562 Cr (18.7%) — up 9.4% QoQ and 18% YoY, but below the 19.1% margin in Q1 FY 2026-2027; EBIT margin was 15.7%. Gross-margin recoveries of Rs.192 Cr were offset by ~Rs.44 Cr employee-cost increases and ~Rs.62 Cr other-income headwinds.
• PAT of Rs.370 Cr (12.3% margin), up ~21% YoY — impacted by working-capital increases, e-mobility inventory build-up, pending customer price recoveries and accounts-receivable issues.
• FCF of only Rs.41 Cr — sharply lower QoQ, with working capital at ~19% of sales; management's stated Q3 FY 2026-2027 focus is working-capital normalization, receivables resolution and FCF rebound.
• Capex of Rs.182 Cr in Q2 — the highest quarterly capex spend, taking 9M FY 2026-2027 capex to Rs.357 Cr; 9M FY 2026-2027 revenue is up 21.4% YoY with 19% EBITDA, 15.8% EBIT and 12.5% PAT margins and FCF of Rs.274 Cr.
• Subsidiary KRSV Innovative Auto Solutions posted Rs.83.7 Cr revenue — with a negative EBITDA of -17.6% in Q2 FY 2026-2027.

Broad-Based Growth; Mobility Margin Divergence Under Scrutiny

• Automotive Technology +17.3% QoQ (~34-35% YoY) — now ~37% of revenue; VLS/aftermarket +2% QoQ (+22% YoY, ~11% of mix); B&IS +10.2% QoQ (+14.7% YoY, 35% of mix); exports/intercompany +12.7% QoQ (+46.3% YoY, 17% of mix vs 15% in Q1 FY 2026-2027).
• Statutory segmental EBIT margins diverged — Mobility declined from 13.1% to 12.2% (~100 bps) while B&IS improved from 21.1% to 22.3%; CFO Hardevi Wazirani attributed this to RM inflation hitting Mobility less than B&IS and Mobility achieving greater price recovery, with adverse sales mix as e-mobility developmental costs flow into cost of production.
• B&IS step-up driven by four sub-segments — two-wheelers, raw materials, wind and distribution all posted QoQ momentum well above double-digit; needle roller bearings are growing at almost ~20% in FY 2026-2027 with no slowdown.
• Wind energy posted phenomenal growth — CEO Harsha Kadam noted it is contingent on European and US equipment demand since 85% of wind equipment produced in India is exported (a deemed export for Schaeffler); railways remains tender-based, so quarterly performance will see ups and downs.
• Traded goods were ~19% of revenue in Q2 FY 2026-2027 — a marginal increase vs Q1 FY 2026-2027; management intends the traded ratio to decline over the coming years (period unspecified) on the localization drive, with the localization target raised from 80% to 85% (period unspecified).

46% Export Growth Beats Guidance, But Management Refuses a New Baseline

• Exports grew ~46% YoY in Q2 FY 2026-2027 — well ahead of the 15-20% growth momentum indicated previously (period unspecified); Europe leads the export order book at ~45%, Asia Pacific ~35% (balance to China and Americas).
• Export growth is predominantly industrial bearings, not automotive — CEO Harsha Kadam noted automotive OEMs typically have captive supply at their production locations; exports serve four markets: Europe, US, China and Southeast Asia.
• Management declined to treat the >Rs.500 Cr quarterly export run-rate as sustainable — exports are fulfilled against quarterly order books under a 90-day frozen period, and Q4 FY 2026-2027 exports are expected slightly lower than current levels unless surprises emerge.
• Only 90-120 days of order visibility — CFO Hardevi Wazirani declined to comment on long-term bearing demand; orders are received by product portfolio, not segment, with no visibility to the end customer or application. She also did not endorse the analyst's suggestion that 25-35% export growth should continue over the next couple of years (FY 2027-2028 onward).
• India cost competitiveness affirmed — CFO cited at least a 25% cost difference between cost of production in Europe and India, but noted the group weighs India alongside Vietnam, Indonesia and Mexico and will not "put all the eggs in one basket."
• Exports are not driven by European plant shutdowns — the Schaeffler group had announced planned relocations to Mexico, China, Vietnam and India over several years, with India receiving order book share based on available capacity after serving the domestic market; Q3 FY 2026-2027 exports are expected to rise to 17% of revenue, aided by the usual Q3 billing spike ahead of the group's ~December 20 billing close.

Half the RM Hit Recovered; E-mobility Inventory Build is Demand-Led

• Raw material inflation impacted gross margin by ~1-1.1% of quarterly sales — CFO Hardevi Wazirani said 50% has already been recovered and the remaining 50% is under negotiation with several customers; historically the company has recovered 80-85% of such price increases, with negotiations taking ~4-6 months and further recovery expected in Q4 FY 2026-2027.
• E-mobility inventory build reflects unbudgeted demand — a sharp increase in e-mobility demand arriving in Q3-Q4 FY 2026-2027, explicitly not customer schedule cuts or program delays; inventories are being built for Q4 FY 2026-2027, are "very likely" to be sold out, with the correction expected by December 2026.
• Plants are at full capacity utilization — CEO Harsha Kadam noted component-level inputs face logistical challenges from West Asia, prompting the company to shore up stocks and inventory to keep operations running.
• Wind is the only calibrated business — CFO said wind customers demanded price increases, as briefed by MD & CEO Harsha Kadam over Q1-Q2 FY 2026-2027; the company focuses only where it creates value and lets go of business otherwise.

GST 2.0 Tailwind, BS7 Optionality, Automation Build-Out

• Auto production up ~31-32% YoY in Q2 FY 2026-2027 — propelled by GST 2.0; PVs led with 25% growth at all-time-high production (~17-18% YTD FY 2026-2027); CVs grew 21% but management flagged CV as cyclical, possibly at peak, and will watch how it pans out in FY 2027-2028; tractors grew 7% in the quarter and 18% YTD FY 2026-2027 despite muted monsoon.
• Customers indicated GST 2.0-driven momentum should continue well into 2027 — at least some quarters of 2027, beyond which visibility is limited; management did not quantify a post-base growth rate for the Automotive Technology segment (which grew 30-40% YoY).
• BS7 transition cited as a likely 2029 catalyst — management cited talks of BS6 moving towards BS7, likelihood 2029, which would drive a revamp of the entire engine and transmission portfolio; the company is gearing up for that transition.
• Industrial automation is ~3% of the company's total in India — bearings are locally manufactured while rotary and linear actuators are imported; management is building its strategy to become more competitive in machine tools, robotics and the humanoid industry, with localized actuator production awaiting market-driven economies of scale.
• Macro tailwinds cited by management — the IMF upgraded its full-year India GDP growth forecast to an average 7% for FY 2026-2027; IIP hit an all-time-high 7.7%; key risks include "alarming" food-inflation sentiment, West Asia-driven energy/fuel costs, and global uncertainty.

Rs.500 Cr Capex on Track; Promoter Stake Sale Intent Remains Unexplained

• CY26 capex guidance of Rs.500 Cr will "surely" be realized — but the breakup across E-axle, Shulagiri Phase 2, Savli wind bearings and railway cannot be shared; CY27/CY28 capex is expected to average close to the Rs.500 Cr CY26 level and "can be slightly up," with budgets still under preparation; both Savli and Shulagiri will continue construction on new halls in FY 2027-2028.
• No Vitesco India merger planned — CFO Hardevi Wazirani stated there is "no such plan of merger of Vitesco India with Schaeffler India Limited on the cards as of now"; CEO Harsha Kadam noted Schaeffler India Limited already sells the Vitesco portfolio to customers, so the two entities are complementary, not competing.
• Promoter intends to reduce stake to ~two-thirds (~67-68%) — from ~74% currently, per the SEBI disclosure, characterized by the CFO as "only minor monetization of shares" while retaining significant control (period unspecified); management stressed this is expressed intent, "not an action that is implemented."
• No rationale disclosed for the reported 7-8% stake sale — in response to Kotak Securities' Apoorva Desai, the CFO said nothing is known beyond what has been intimated to SEBI and the exchanges; no size, rationale, or timeline has been confirmed as of the Q2 FY 2026-2027 call.
• Outlook: double-digit YoY growth committed for FY 2026-2027 — across both domestic and export businesses; with the festival season split across October-November 2026, the strongest demand months lie ahead in Q3 FY 2026-2027, whose stated priorities are margin recovery, working-capital normalization, receivables resolution and FCF rebound.