SCHAEFFLER - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:16 pm

Fundamental Rating: 4.1

📊 Financials: Schaeffler has a market cap of ₹60,177 Cr. Current price is ₹3,850 with a 52-week high/low of ₹4,393/₹2,823. PAT this quarter is ₹307 Cr vs ₹296 Cr in the previous quarter, showing steady growth. ROCE at 25.7% and ROE at 19.2% reflect strong efficiency. Debt-to-equity ratio of 0.01 indicates an almost debt-free balance sheet.

💹 Valuation: Stock P/E is 53.8, significantly higher than industry PE of 30.0, suggesting premium valuation. Book value is ₹352, giving a P/B ratio of ~10.9. PEG ratio at 3.40 indicates stretched valuation relative to earnings growth. EPS is ₹71.5, showing strong profitability. Dividend yield of 0.74% adds moderate shareholder return.

🏭 Business Model: Schaeffler operates in precision engineering, bearings, and automotive components. Competitive advantage lies in global presence, advanced technology, and strong OEM relationships. Business model is resilient with diversified industrial and automotive exposure, though cyclical demand in auto sector can impact margins.

📈 Entry Zone: Technically, DMA 50 (₹3,949) and DMA 200 (₹3,887) suggest support zones. Entry is favorable near ₹3,800–₹3,900 if price consolidates. Current RSI at 37.8 indicates oversold conditions, offering potential accumulation opportunity.

🕰️ Long-Term Holding: Strong ROCE, ROE, and debt-free status support long-term compounding. Valuation is stretched, so investors should accumulate on dips closer to intrinsic value zones for sustained returns.

Positive

• ✅ Strong ROCE (25.7%) and ROE (19.2%)
• ✅ Debt-free balance sheet (0.01 debt-to-equity)
• ✅ Consistent PAT growth (296 Cr → 307 Cr)
• ✅ EPS of ₹71.5 indicates profitability strength

Limitation

• ⚠️ High P/E (53.8) vs industry PE (30.0)
• ⚠️ P/B ratio ~10.9 indicates premium valuation
• ⚠️ PEG ratio elevated (3.40)

Company Negative News

• 📉 FII holding reduced (-0.11%)
• 📉 Bearish technical trend (MACD -55.4)

Company Positive News

• 📈 DII holding increased (+0.16%)
• 📈 Quarterly profit variation (+24.1%)

Industry

• 🏭 Auto component industry PE at 30.0 highlights sector growth potential
• 🏭 Industry supported by global OEM demand and infrastructure expansion

Conclusion

🔎 Schaeffler is fundamentally strong with high efficiency, debt-free balance sheet, and consistent profitability. Valuations are stretched, but oversold technicals offer accumulation opportunities near ₹3,800–₹3,900. Long-term investors can hold for compounding, supported by strong industry demand and global presence.

Would you like me to extend this with a peer benchmarking overlay comparing Schaeffler against other auto component leaders, or a sector scan to highlight undervalued industrial engineering companies?