Schaeffler India Shares Hit Record High On Bullish Analyst Ratings After Q2

Steel rods sit in a storage area at the Schaeffler automotive component factory. (Photographer: Krisztian Bocsi/Bloomberg)

Schaeffler India Shares Hit Record High On Bullish Analyst Ratings After Q2

Shares of Schaeffler India Ltd. jumped to a record high as analysts remained bullish on the auto parts supplier, citing focus on localisation and technological innovation, and key order wins in commercial vehicle and tractor segments, among others.

The ball and roller bearing maker saw its net profit and revenue fall sequentially in the quarter ended June. The earnings and top line, however, rose over the year earlier. Schaeffler India follows January-December fiscal.

June-Quarter Results: Standalone, QoQ

  • Revenue from operations stood at Rs 1,232.89 crore against Rs 1,316.8 crore.

  • Net profit was at Rs 128.13 crore compared with Rs 139.54 crore.

  • Total expenses were at Rs 1,075.19 crore versus Rs 1,152.73 crore.

Shares of the company gained more than 11.69% to Rs 6,490 apiece in the afternoon trade on Friday. So far this year, the scrip has rallied close to 41% and 74% in the past 52 weeks.

Of the 10 analysts tracking the company, eight have a ‘buy’ rating, and two recommend a ‘hold’, according to Bloomberg data. The overall consensus price target of analysts is around the current market price of the stock.

Here’s what brokerages have to say about Schaeffler India's June-quarter results.

Edelweiss

  • Recommends ‘buy’ with a 12-month price target of Rs 7,720.

  • Strong showing in the June quarter driven by automotive tech sales, improved exports.

  • Steady focus on localisation, rising content per vehicle and thrust on technological innovation to drive growth.

  • Key wins in commercial vehicles and tractor segment for clutch and transmission solutions augured well for the growth prospects.

  • Demand to remain robust driven by offerings in e-mobility.

  • Company well-positioned as a play on mobility with rising localisation.

JM Financial

  • Recommends ‘buy’ with a 12-month price target of Rs 7,200 apiece.

  • Resilience in non-mobility segments, exports aided earnings growth.

  • Better sales mix and cost recovery to continue to support margins.

  • Domestic and global order wins likely to sustain sales growth.

  • The growth trajectory is likely to accelerate for CY20-23.

  • Growth momentum witnessed in June quarter is sustainable.

Kotak Institutional Equities

  • Recommends ‘add’ with a fair value of Rs 5,950.

  • Strong growth prospects led by a pipeline of new products and strong export growth potential.

  • Expects sharp improvement in return returns and strong free cash flow generation

  • Gross margins rose due to pass-through of steel prices increase to the OEMs.

  • Expects Schaeffler India to deliver 22% revenue CAGR over CY2020-23E.

  • Growth to be driven by exports segment, fresh product offerings in new geographies, key order wins in CV and tractor segment, localisation efforts and focus on technological innovation.

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