Prime Stock Recommendation: Engineering Growth with EV Upside

1. 

   rajaram_bala

   October 17, 2025 at 7:55 am

   I think india entity converted value is Euro 6.5 Million not billion.

   Hi Chandra, This is an interesting point of view – By paying “Royality on Sales” and not going R&D heavy that can have “success” and “failures (impairment write-offs)” the financials of Indian arm have become like an FMCG Co. with little capital investments.

   India PE multiples are always high because of its projected growth potential in Earning. Same can’t be said for the other markets. (Example Suzuki quoted above). Any transaction between Indian entity and parent will be most of the time beneficial to parent entity (Royalty percentage and other overseas sales margin etc).
2. 

   A B

   October 10, 2025 at 8:16 pm

   I see “Schaeffler India” is not listed in prime stocks yet (https://staging.primeinvestor.in/prime-stocks/). Is there any specific reason for that?
   1. 

      Vidya Bala

      October 12, 2025 at 10:33 am

      Hello Sir, Sorry, it is a technical glitch/delay. We will add it shortly. Thanks, Vidya
3. 

   Vivek raj

   October 10, 2025 at 11:27 am

   Schaeffler AG has a Market capitalization of 5.99 billion EUR , and its Indian arm is valued at 65,047 crore Indian Rupees (approximately €6.33 billion) . When their indian sales / EPS must a lesser % of group , why do we value them so high ?

   We have the same story for many MNC listed in India .. Could you research and guide on fair valuation in comparison to their parent company?
   1. 

      N V Chandrachoodamani

      October 12, 2025 at 2:14 pm

      Welcome your query sir,

      This MNC Parent Valuation Vs their listed domestic subsidiaries have been a dilemma for long.

      But there are three clear reasons behind that;
      1. The capital efficiency (RoCE) and profitability of Indian arms have been better
      2. Growth rate in India has been higher
      3. Overall valuations of the sector and peer companies are also higher in India

      To elaborate further, the point 1) is also an outcome of easy tech access from parent, little R&D while enjoying competitive advantage in their business in India.

      And on point 3) if you look at auto & ancillary sector, even mediocre companies are trading at 30-50 times earnings. We have seen highly capital-intensive casting & forging companies trading at such valuation bands

      That is also pushing valuation of companies like Schaeffler higher

      To give one more Eg. related to point 1), Suzuki Motors Japan and Hyundai Motor Corp Korea trade at far lower valuations than their Indian arm. A material factor here is that Indian arms are run like consumer businesses where lumpy R&D investments and write-offs are not there. By paying “Royality on Sales” and not going R&D heavy that can have “success” and “failures (impairment write-offs)” the financials of Indian arm have become like an FMCG Co. with little capital investments. They even operate in negative W.C (auto sector itself).

      So, the long-term cash flow compounding is fabulous and that is evident from the BS of Maruti and Hyundai.

      So, if material differences exist in cash flow compounding and capital efficiency, that leads to valuation difference

      Hope this clarifies.

      Sorry for not being able to provide a precise comparison.

      Thank you

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