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Last Updated : Apr 20, 2018 11:27 AM IST | Source: Moneycontrol.com

Accumulate Schaeffler India, hold for long term: Akash Jain

"The free float of the company is very small and hence suggest long term investors mainly in the retail segment accumulate it gradually and hold it for a long time," says Akash Jain, Vice-president, Equity Research at Ajcon Global Services.

 
 
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Akash Jain

Schaeffler India is expected to be strong play on the revival of Indian economy especially industrial and automotive segments. March 2018 monthy sales of automotive numbers have been good which shows that the economy is picking up. Impact of revival of the economy was witnessed in its Q1CY18 result.

The topline witnessed YoY growth of 13 percent due to pick up in industrial segment by 14 percent on YoY basis) and spike in automotive OEM by 26 percent on a yearly basis. Distribution segment which accounts for 30 percent of sales) has also witnessed strong double digit growth. The management expects growth to sustain in coming quarters which may lead to rerating of the stock.

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The company has gone for a price hike of 4 percent (effective April 1) across product categories to reduce the impact of rising input cost. However, actual impact on numbers in the next quarters will depend on the inventory levels with customers, price negotiations with key customers,etc.

To give some background of this company as many investors are not aware of this Company. The Schaeffler Group is a leading manufacturer of rolling

bearings and linear products worldwide as well as renowned supplier to the automotive industry. In India, with its three strong brands – INA, FAG and Luk – the Schaeffler Group has emerged as a leading development and engineering partner for its customers ensuring cost effective local production, rapid delivery service, seamless application engineering and sales support. LuK India is ISO TS 16949 Certified Company, strategically located in South India at Hosur in the state of Tamilnadu. LuK India is a fully integrated Clutch Assembly manufacturing unit with in house research and development capabilities.

INA Bearings India Pvt. Ltd. was incorporated in 1998 in Pune. INA India specializes in rolling bearings and precision parts for a wide range of applications in the automotive industry, motorcycles, precision equipment, machine tools and material handling, to name a few.

FAG Bearings India Limited was incorporated in 1962. Since January 2002 FAG has been integrated into a strong network because that is when FAG, together with INA and LuK formed the Schaeffler Group. INA and FAG became the world’s second largest rolling bearing manufacturer. On July 7, 2017 it was renamed to Schaeffler India Limted.

Schaeffler India’s headquarter and manufacturing facilities are located in Vadodara, Gujarat, India.

The company has its presence in automotive and across all core industrial segments. Indian automotive industry has rapidly progressed in the last decade. Schaeffler India has been a proud partner in this technical progress providing Indian industry with bearings of contemporary technology and global quality standards. Schaeffler India's advanced system solutions for wheels, power train and engine accessories support the automotive industry’s need for higher levels of integration, increased safety, driving comfort and environment protection. No wonder, FAG is the number one supplier of hub bearings to the Indian passenger car industry.

Since inception, the Indian Railways has been an important customer and Schaeffler India is recognized as the most reliable source for critical applications namely  traction motors, journal roller bearings, transmission, auxiliary motors, etc.

Schaeffler India caters to all major industry segments including: construction machinery, electrical engineering, fluid technology, conveying equipment, industrial gears, mining & cement, power generation, agricultural engineering, steel plants, motorcycles, textile machinery, machine tools, wind power, pulp and paper and so on.

Recent times have seen the Indian manufacturing industry metamorphose into a global force to reckon with. Schaeffler India has been an integral part of this industrial revolution providing innovative bearing systems for a wide range of applications. Proximity to the customer and intimate knowledge of individual requirements has enabled Schaeffler India to provide innovative solutions on time and within budgets.

FAG bearings from the Indian plant are exported to Europe, US and Asia. International customers using Schaefffler India products include Daimler Chrysler, Volvo, Volkswagen, Renault, Voith, Otis and General Dynamics.

The free float of the company is very small and hence suggest long term investors mainly in the retail segment accumulate it gradually and hold it for a long time.

Disclaimer: The author is Vice-president, Equity Research at Ajcon Global Services. The views and investment tips expressed by investment experts on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
First Published on Apr 20, 2018 11:27 am
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