SCHAEFFLER - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 05 Nov 25, 7:43 am

Fundamental Rating: 4.3

⚙️ Schaeffler India Ltd stands out with exceptional capital efficiency, near-zero debt, and consistent earnings growth, though its premium valuation and technical softness suggest a cautious entry approach.

📈 Positive

• Excellent Capital Efficiency: ROCE of 25.7% and ROE of 19.2% reflect strong operational performance.
• Debt-Free Structure: Debt-to-equity ratio of 0.01 ensures financial stability and flexibility.
• Consistent Profit Growth: PAT rose from ₹265 Cr. to ₹296 Cr., a 16.8% quarterly increase.
• Strong EPS: ₹67.7 supports long-term value creation.
• Dividend Yield: 0.70% offers modest income for investors.

⚠️ Limitation

• High Valuation: P/E of 59.5 is significantly above the industry average of 32.6.
• Elevated PEG Ratio: 3.76 suggests growth may not fully justify the premium.
• MACD Negative: -34.3 indicates short-term bearish momentum.
• Minor Decline in FII Holdings: -0.11% reflects slight foreign investor caution.

📉 Company Negative News

• Stock trading near resistance levels with weakening MACD trend.
• Valuation concerns raised due to high P/E and PEG ratios.

📈 Company Positive News

• Quarterly profit up 16.8%, driven by robust demand in automotive and industrial segments.
• Expansion into EV components and smart mobility enhances long-term growth prospects.
• Positive DII sentiment with a 0.16% increase in holdings.

🏭 Industry

• Auto component sector is benefiting from EV adoption and premium vehicle demand.
• Industry P/E of 32.6 reflects moderate valuation norms.
• Schaeffler’s global parentage and OEM relationships provide a strong competitive edge.

🧾 Conclusion

• Entry Zone: ₹3,800–₹3,950 could be a favorable accumulation range based on RSI and DMA levels.
• Long-Term View: Hold for 3–5 years; strong fundamentals and sector tailwinds support sustained growth.
• Valuation Watch: Consider phased entry or wait for earnings catch-up to justify current price.