Schaeffler India proposes capacity expansion plan at an investment of ₹1,500 crore over the next three years

Finance Bill

Schaeffler India is a large-cap company that works in the auto accessories business. Its market value is 43,704 Cr. Schaeffler has a big presence in India thanks to its well-known brands FAG, INA, and LuK. The company has four factories and 11 sales offices there. Over the next three years, the company plans to spend 1,500 crore on capacity growth. This includes building a new facility at Hosur for 300 crore.

“As we move forward into the future, we are still firmly committed to growing our business. This year, we spent $4,990,000,000 on capital expenditures (Capex). Our main goal was to improve our export capabilities and help our domestic automotive and industrial businesses grow. For the automotive business, we are building a plant in Hosur, Tamil Nadu, that will be sustainable and ready for the future. At the same time, our plant in Savli, Vadodara, will be expanded “Schaeffler India’s annual report for 2022 said the same thing.

“We have carefully gone over our CAPEX strategy, taking into account both internal and external factors. We want to invest 15,000,000,000 over the next three years. We will keep focusing on capital efficiency to make better use of resources and get the best returns “the rest of the report says.

Abhishek Gaoshinde, Deputy Vice President of Research at Sharekhan by BNP Paribas, had this to say about Schaeffler’s CAPEX strategy: “Schaeffler has been a leader in the domestic bearing market, and it has also been getting a lot of orders from overseas. Exports have brought in 16.9% of its revenue in CY22, which is more than the 12.9% they brought in in CY21. Its expertise in engineering and ability to make things in a cost-effective way help explain the rise in export revenue. Schaeffler has raised its capital expenditure plan from 1200cr to 1500cr over the next three years, which we think is in line with its expected order flow. We think that Schaeffler is one of the biggest winners from the China +1 and Europe +1 strategies that MNCs use. Having said that, and taking into account the fact that Schaeffler needs to make more of its goods available locally to meet both domestic and international demand, we think that the extra capital expenditures will be good for the company in the medium term.”

Rahul Ghose, the founder and CEO of Hedged, an algorithm-powered advisory platform, said about the stock’s technical outlook, “The Schaeffler India stock has been broadly moving sideways for the last 10 weeks and has a strong support just above the 2500 mark. Even though the company has had positive results for 9 months in a row, it is still being valued at a high level based on the price to book value metric. The stock could technically go up because it is trading near a demand zone, but there are several supply levels between 2800 and 3000 that could stop this. Positional traders shouldn’t buy the stock until it gets close to the 2550 mark, which is also where the lower Bollinger bands start.”

A R Ramachandran, co-founder and trainer at Tips2trades, said this about the stock’s technical prospects: “Schaeffler India is a strong buy on every correction because it has strong fundamentals like consistent profitability and a consistently high ROCE of above 20%. From a technical point of view, a Daily close above 2848 will be very bullish, and investors can buy with a short-term goal of 3138. Help will be available right away at 2738.” Schaeffler India shares ended the day on the NSE at 2,787.00 each, which is 0.01% less than the previous close of 2,787.15. On September 15, 2022, the stock hit a 52-week high of 3,969.85 and a 52-week low of 1,840.85. (25-Mar-2022).

Source: Team CurrencyVeda