Schaeffler India rallies 4% on strong Q2FY22 results and significant corporate actions

Leading industrial and automotive supplier, Schaeffler India announced that its board has approved results for the quarter ending on September 30, 2021. The board also approved a stock split and target dividend payout ratio.

Total revenue from operations for Q2FY22 was Rs 1,487.6 crore, higher by 32.7% than the corresponding quarter of the previous year and 20.7% higher than the preceding quarter. Profit before tax (before exceptional items) for the quarter was Rs 229.6 crore, which happened to be 50.3% higher than the corresponding quarter of 2020 and 34.6% higher than the preceding quarter. PBT margin for the quarter stood at 15.4%, against 13.6% during the corresponding quarter of 2020. Net Profit for the quarter was Rs 170.8 crore while the margin for the quarter stood at 11.5%.

To quote, Harsha Kadam, Managing Director of Schaeffler India from a filing with the exchange, “This is our fourth consecutive quarter showing a strong performance. The performance demonstrated during the first half of the year further improved in the third quarter, despite significant input cost pressures. Our business divisions – automotive technologies, automotive aftermarket and industrial have delivered resounding performance and further consolidated our position of being the preferred technology partner. However, we do see some headwinds due to the global chip shortage and the resultant supply chain disruptions, which we are monitoring closely. Our continued focus on countermeasures and deeper customer engagements have yielded impressive results.”

The Board of Directors approved a subdivision of each equity share of the face value of Rs 10 per share into five equity shares of the face value of Rs 2 per share, subject to the approval of the shareholders. The 5 for 1 stock split will see existing shareholders issued with five new shares, in lieu of every one share they currently own. The rationale behind the stock split is to encourage wider participation of investors and to improve the liquidity of the equity shares in the stock market.

The Board of Directors also approved the target dividend payout ratio of 30%-50% of the annual standalone profits after tax (PAT) to be announced by the company from time to time, subject to the applicable rules and regulations. The company has adopted a progressive dividend policy, intending to sustain or raise the dividend each year, in conjunction with the financial performance and free cash flow generation each year. The company shall endeavour to consider a total dividend payout ratio as indicated above subject to the circumstances and scenarios mentioned in the dividend distribution policy.

Schaeffler India’s share price rallied 4% during early market hours on Friday, 29 October 2021.