Schaeffler India (SCHAEFFLER)

FairStock Score: 53/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 2/2 · Growth: 2/2 · Dividend: 0/1

Key Financials

Strengths

• High ROE of 21.35% and ROCE of 29.79% demonstrate exceptional capital efficiency
• Negligible debt (D/E 0.01) with strong free cash flow of ₹949 Cr provides financial resilience
• Consistent profit growth of 22.36% and sales growth of 16.33% show a fast-growing franchise
• Promoter holding of 74.13% ensures aligned interests and stability
• Piotroski F-Score of 8/9 indicates a very healthy balance sheet

Concerns

• Premium valuation with P/E of 56.93, P/B of 12.65, and EV/EBITDA of 32.17 leaves little margin of safety
• Price of ₹4,220 is about 30% above the DCF intrinsic value of ₹3,242
• Dividend yield of only 0.64% provides negligible income protection in a downturn
• Trading near the top of its 52-week range, offering limited upside from current levels

AI Analysis

Let's look at Schaeffler India. A wonderful business, no doubt. Return on equity of 21.35% and ROCE near 30% tell me this company knows how to deploy capital profitably. It carries almost no debt—debt to equity of 0.01—and generated free cash flow of ₹949 crore. The Piotroski score of 8 out of 9 confirms a healthy balance sheet. Promoters hold 74%, so interests are aligned. Sales grew 16.33% and profit 22.36%, showing operating leverage. This is precisely the kind of compounding machine I seek. But I don't buy merely good businesses; I buy them at sensible prices. Today, Schaeffler trades at ₹4,220, a P/E of 56.93 and P/B of 12.65. Even with high quality, that multiple leaves little room for error. My rough DCF says intrinsic value is ₹3,242, meaning the market is asking me to pay a 30% premium. The dividend yield is just 0.64%. As Graham would say, price is what you pay, value is what you get. Here, the value is excellent, but the price is not. That said, if the company continues on this growth trajectory—profit climbing 22% annually—time will eventually justify the valuation. I would wait for a better entry point, perhaps closer to the 52-week low of ₹3,518, or a meaningful pullback. For now, Schaeffler is a stupendous business, but not a stupendous investment at this price.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer