Debt free stock to pay 1200% dividend, mutual fund stake up in Q3: Buy?

With a market capitalization of Rs. 45,856.37 Cr., Schaeffler India is a large-cap company with operations in the consumer discretionary industry. The company provides rolling and plain bearing solutions for a wide range of industrial applications, as well as components and systems for engine, transmission, and chassis applications. With four manufacturing plants and 11 sales offices, Schaeffler has a substantial footprint in India with three major, well-known product brands: FAG, INA, and LuK.

Schaeffler India Dividend

While announcing its Q3FY23 earnings, Schaeffler India declared a dividend of 1200% or Rs. 24/- per equity share of face value of Rs. 2/- each. The company will close its share transfer books and member register from Wednesday, April 12, 2023, until Tuesday, April 18, 2023, all days included, in order to prepare for its 60th annual general meeting and compile a list of its shareholders who are eligible for dividend payments. Also, according to BSE, the ex-date for Schaeffler India dividend is falling on April 11, 2023.

Schaeffler India Q3 Earnings

A 17.8% YoY growth from 1523.20 Cr in Q3FY22 to 1794.65 Cr in Q3FY23 was reported by the company as its revenue from operations. The company said its net expenses reached 1,503.35 crore during the quarter ended December 2022, up by 16.71% YoY from 1288.10 Cr recorded in the year-ago quarter. The company’s net income rose by 21.2% year-on-year to 230.98 crore in the quarter that ended in December 2022 from 190.64 crore in the quarter that ended in December 2021, while PAT margins remained at 12.9%. In comparison to Q3FY22’s EPS of Rs. 12.2, Schaeffler India’s EPS in Q3FY23 was 14.8.

Schaeffler India Share Price

On Friday, the shares of Schaeffler India closed on the NSE at 2,940 apiece, down by 1.79% from the previous close of 2,993.60. The stock has produced a multibagger return of 175.77% over the past five years, and a multibagger return of 217% during the past three years. The stock has appreciated 61.24% over the past year, and it has climbed 8.06% year to date (YTD) in 2023. The stock touched a 52-week-high of 3,969.85 on (15-Sep-2022) and a 52-week-low of 1,650.05 on (07-Mar-2022). During Q3FY23, the company recorded a promoter shareholding of 74.13%, FIIs stake of 4.81%, DIIs stake of 15.04% and a public stake of 6.02%.


Promoters’ holdings are unchanged at 74.13%, while FII/FPI holdings have declined from 5.74% in the September 2022 quarter to 4.81% in the December 2022 quarter, the number of FII/FPI investors has dropped from 291 in Q2FY23 to 268 in Q3FY23, mutual funds’ holdings have risen from 13.07% in Q2FY23 to 13.91% in Q3FY23 and institutional investors’ holdings have lowered from 19.93% in Q2FY23 to 19.86% in Q3FY23, as per the data of Trendlyne. Schaeffler India has a debt-to-equity ratio of zero marking it a debt-free company, a Return on Equity(ROE) of 20.5% in FY22 and a PEG ratio of 0.45.

Buy Schaeffler India?

“Post reporting the decent performance in Q3FY2023, the company has increased its capex programme and guided for a capex of Rs. 1,500 crore over CY2022-CY2024E compared to the earlier plan of Rs. 1,000 crore to Rs. 1,200 crore. Increased capex would improve the localisation and, hence, profitability on the shift in opex (outsourced products) to capex. Though export markets are facing headwinds, the company indicates for a healthy traction in export on account of its strategic initiatives, localisation, and relocation strategy in overall group. Schaeffler is assumed to be one of the key beneficiaries of China Plus 1 theme, followed by global players. Along with a strong position in railway and IC business, the company is focusing on the EV business and guided for a doubling of content per vehicle on the shift in business from ICs to EVs. While the company is facing headwinds in the overseas wind energy segment, it foresees a rising opportunity in the domestic wind energy segment. We continue to remain positive on SIL due to consistent performance, rising export, increasing localisation, positive outlook on the domestic PV segment, traction in the railway business, and strong presence in the aftermarket segment. We maintain our Buy rating on the stock with a TP of Rs. 3,328. The stock trades at a P/E multiple of 38.9x and EV/EBITDA multiple of 24.4x its FY2025 estimates,” said the brokerage firm Sharekhan post the Q3 earnings of Schaeffler India.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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