Despite tough business conditions, Schaeffler India’s (SCHFL) 1QCY25 sales grew 16% yoy to Rs 21.7bn, in line with EE. Domestic sales were up 15% yoy (auto: +21% yoy, industrial: +8% yoy), while exports remained strong with a 23% yoy growth. EBITDA margins at 18.1% (in line with EE) expanded 45bps yoy/75bps qoq backed by volume growth and operational efficiencies. After three capex-heavy years – averaging Rs 5.8bn annually – SCHFL’s capex intensity has started moderating, with 1QCY25 capex at Rs 825mn. With major investments largely behind, the company is now focused on improving capacity utilisation. We broadly maintain CY25/CY26 estimates and reaffirm our positive stance on SCHFL within India’s bearings space. Revise to ADD (from LONG) with a Jun’26 TP of Rs 3,720 (vs. Rs 3,590 earlier) set at 40x (unchanged) Jun’27 EPS.

Automobile technologies – growing ahead of industry: SCHFL continued to outpace underlying vehicle production trends with 14% yoy/7% qoq growth during the quarter. 2Ws industry saw 6% yoy growth in 1QCY25, aided by exports and EV adoption, while PVs (largest segment) grew in single digits. Tractors were up 19% yoy, sustaining a positive outlook, while CVs benefitted from GOI’s infra push. The E-axle project (a ~€ 300mn order), though off to a slower-than-expected start, has entered series production, and the company remains optimistic about its long-term potential. Collaboration with Vitesco is beginning to yield benefits, enabling SCHFL to expand its offerings across ICE and EV platforms. Management remains confident of sustaining double-digit growth by (a) increasing CPV (currently at €50 in PVs), (b) winning new programs, and (c) localising hybrid and ICE-related components to meet evolving demand.

Auto aftermarket – decent performance: 1Q revenues (ex-Koovers) grew 12% yoy but declined 2% qoq, reflecting the seasonal trend of a stronger fourth quarter. Koovers reported 20% qoq growth, in line with its expectations, with increased customer stickiness. SCHFL continues to focus on expanding its footprint, enhancing platform offerings, and improving operational efficiency across locations.

Bearings & Industrial Solutions – brightest prospects: The BIS segment grew 12% yoy but declined 7% qoq due to a weaker-than-expected pickup in distribution demand post-4Q.mGrowth was led by wind energy (driven by gearbox manufacturers), raw materials, off-road, and construction equipment. Among the company’s segments, we are most positive on BIS, a key beneficiary of SCHFL’s localisation drive and production line shifts from Europe, with full benefits likely in CY25-CY26.

Exports – stronger than expected rebound: Exports saw a strong resurgence, with 23% yoy/20% qoq growth led by strong demand in Asia Pacific and Europe, particularly from new markets such as Southeast Asia, Japan, and Korea. With exports largely comprising industrial bearings, SCHFL remains confident of sustaining the ~Rs 3bn/quarter run-rate, aided by adequate capacity. Minimal exposure to the US limits tariff-related risks.