The December quarter witnessed the company's strongest quarterly revenue performance in recent history, driven by robust project execution and order book conversion. Operating profit (excluding other income) jumped to ₹172.58 crores with margins expanding to 16.77%, reflecting improved operational leverage and cost management. However, the year-on-year profit comparison reveals a 12.21% decline, primarily attributable to an exceptionally strong base quarter in December 2024 when net profit stood at ₹110.53 crores.
The quarter's performance underscores the cyclical nature of the heavy electrical equipment sector, where lumpy order execution can create significant quarterly volatility. Despite the YoY profit decline, the company's nine-month FY26 performance remains encouraging, with cumulative net profit reaching ₹190.59 crores compared to ₹213.28 crores in the corresponding period last year.
| Quarter | Revenue (₹ Cr) | QoQ Growth | Net Profit (₹ Cr) | QoQ Growth | Operating Margin |
|---|---|---|---|---|---|
| Dec'25 | 1,029.17 | +58.30% | 97.03 | +85.47% | 16.77% |
| Sep'25 | 650.14 | +4.59% | 52.32 | +26.86% | 12.89% |
| Jun'25 | 621.63 | +5.92% | 41.24 | -24.47% | 11.15% |
| Mar'25 | 586.89 | -31.53% | 54.61 | -50.60% | 14.77% |
| Dec'24 | 857.20 | +42.94% | 110.53 | +103.67% | 16.35% |
| Sep'24 | 599.71 | +1.15% | 54.27 | +11.95% | 12.37% |
| Jun'24 | 592.91 | — | 48.48 | — | 13.78% |
Financial Performance: Revenue Surge Drives Profitability
Schneider Electric Infrastructure's Q3 FY26 financial performance showcased remarkable sequential momentum, with net sales climbing 58.30% QoQ to ₹1,029.17 crores from ₹650.14 crores in Q2 FY26. The year-on-year revenue growth of 20.06% demonstrates sustained demand traction in the infrastructure and electrical equipment space, driven by government capital expenditure programmes and private sector investments in grid modernisation.
Operating profit (PBDIT excluding other income) expanded significantly to ₹172.58 crores, marking the highest quarterly operating profit in the company's recent history. The operating margin improvement to 16.77% from 12.89% in the previous quarter reflects strong operational leverage benefits as the company scaled up production to meet order book commitments. This margin expansion was achieved despite elevated employee costs of ₹82.09 crores, suggesting effective absorption of fixed costs through higher revenue generation.
The profit before tax surged 86.35% QoQ to ₹130.41 crores, with the company maintaining a stable tax rate of 25.60%. Net profit margins stood at 9.43%, up from 8.05% in Q2 FY26, though still below the exceptional 12.89% achieved in December 2024. Interest costs rose to ₹13.76 crores from ₹11.23 crores, reflecting higher working capital utilisation to support the revenue ramp-up.
Operational Excellence: Exceptional Capital Efficiency Drives Returns
Schneider Electric Infrastructure's operational metrics reveal a company operating at peak efficiency, with return on equity (ROE) averaging an exceptional 73.96% over recent periods. This extraordinary capital efficiency, significantly higher than the industry norm, reflects the company's ability to generate substantial profits relative to shareholder equity. The latest ROE of 37.29% remains impressive, though moderated from historical highs due to equity base expansion following retained earnings accumulation.
Return on capital employed (ROCE) stood at 38.85% in the latest period, demonstrating strong profitability on the capital deployed in operations. The average ROCE of 24.50% over recent years underscores consistent operational excellence, with the company generating robust returns well above its cost of capital. The five-year EBIT growth rate of 67.79% highlights the company's successful scaling of operations and margin improvement journey from a sub-optimal profitability profile in earlier years.
The balance sheet reveals improving health, with shareholder funds expanding to ₹561.88 crores as of March 2025 from ₹296.17 crores a year earlier, driven by strong profit retention. However, the company continues to carry significant long-term debt of ₹427.78 crores, resulting in a debt-to-equity ratio of 0.76 times. The debt-to-EBITDA ratio of 4.97 times signals elevated leverage, though this has been trending downward as EBITDA generation accelerates.
Key Operational Strength
Exceptional Return Metrics: With ROE averaging 73.96% and ROCE at 38.85%, Schneider Electric Infrastructure demonstrates outstanding capital efficiency. The company generates nearly 74 paise of profit for every rupee of shareholder equity, reflecting highly productive deployment of capital and strong competitive positioning in the heavy electrical equipment sector.
Working Capital Dynamics: Cash Generation Remains Robust
The company's working capital management showed marked improvement in FY25, with cash flow from operations reaching ₹307 crores compared to ₹189 crores in FY24. This 62.43% increase in operating cash flow demonstrates effective conversion of accounting profits into actual cash, a critical quality indicator for manufacturing businesses. The closing cash position strengthened significantly to ₹258 crores from ₹47 crores, providing enhanced financial flexibility.
Current assets stood at ₹1,370.36 crores as of March 2025, with trade receivables forming a substantial component. The debtors turnover ratio improved to 4.21 times on a half-yearly basis, indicating faster collection cycles and reduced working capital lock-up. However, current liabilities of ₹805.86 crores, including trade payables of ₹500.26 crores, reflect the company's strategy of optimising supplier credit to fund operations.
| Metric | Q3 FY26 | Q2 FY26 | Q1 FY26 | Q4 FY25 |
|---|---|---|---|---|
| Operating Profit (₹ Cr) | 172.58 | 83.81 | 69.33 | 86.68 |
| Interest Cost (₹ Cr) | 13.76 | 11.23 | 10.77 | 12.93 |
| Depreciation (₹ Cr) | 8.40 | 7.05 | 6.97 | 6.35 |
| Tax (₹ Cr) | 33.38 | 17.65 | 14.65 | 18.50 |
| Tax Rate (%) | 25.60% | 25.23% | 26.21% | 25.30% |
Industry Context: Riding the Infrastructure Investment Wave
Schneider Electric Infrastructure operates in the heavy electrical equipment sector, which has witnessed robust growth driven by India's infrastructure development push and grid modernisation initiatives. The company's 16.07% five-year sales CAGR aligns with the sector's growth trajectory, though the recent acceleration suggests market share gains and improved competitive positioning.
The industry faces tailwinds from government capital expenditure on power transmission and distribution infrastructure, renewable energy integration requirements, and private sector investments in industrial electrification. However, the sector remains characterised by intense competition, lumpy order flows, and working capital intensity. Raw material price volatility, particularly for copper and steel, poses margin risks, though Schneider's improving operating margins suggest effective cost pass-through mechanisms.
The company's transformation from a loss-making entity in FY20-21 (net loss of ₹1 crore and ₹29 crores respectively) to consistent profitability reflects both sectoral recovery and company-specific operational improvements. The operating margin expansion from 1.9% in FY20 to 14.5% in FY25 demonstrates successful business model optimisation and pricing power development.
Sector Positioning
Schneider Electric Infrastructure has successfully navigated the industry's cyclical challenges, transforming from marginal profitability to robust returns. The company's 67.79% five-year EBIT CAGR significantly outpaces revenue growth of 16.07%, indicating substantial operating leverage benefits and margin improvement. As India's electrical infrastructure investment cycle extends through the decade, well-positioned players like Schneider stand to benefit from sustained order inflows.
Peer Comparison: Premium Valuation Versus Strong Returns
Schneider Electric Infrastructure trades at a significant premium to its heavy electrical equipment peers, commanding a P/E ratio of 76.62x compared to the sector average of approximately 56x. This valuation premium reflects the company's exceptional ROE of 73.96%, which substantially exceeds peer group averages around 14%. The price-to-book ratio of 28.57x similarly towers above the peer average of roughly 16.9x, justified partially by superior return metrics.
Among key competitors, Siemens Energy India trades at 88.50x earnings with an ROE of 25.11%, whilst GE Vernova T&D commands 82.78x with 16.31% ROE. Suzlon Energy, at 19.72x P/E and 14.45% ROE, offers a more modest valuation profile. Thermax, trading at 52.75x with 11.85% ROE, represents a mid-tier valuation-quality balance. The comparison reveals Schneider's unique position: highest ROE in the peer group, yet not the most expensive on P/E multiples.
| Company | P/E (TTM) | P/BV | ROE (%) | Debt/Equity | Div Yield |
|---|---|---|---|---|---|
| Schneider Elect. | 76.62 | 28.57 | 73.96% | 0.38 | NA |
| Siemens Ener.Ind | 88.50 | 22.22 | 25.11% | -0.76 | 0.15% |
| GE Vernova T&D | 82.78 | 44.43 | 16.31% | -0.41 | 0.14% |
| Suzlon Energy | 19.72 | 8.11 | 14.45% | -0.06 | NA |
| Thermax | 52.75 | 6.68 | 11.85% | -0.14 | 0.49% |
| Inox Wind | 37.06 | 2.89 | 2.29% | 0.09 | NA |
The peer comparison highlights Schneider's distinctive profile: exceptional profitability metrics (highest ROE at 74%) combined with moderate leverage (0.38x debt-to-equity versus negative ratios for some peers). However, the company's refusal to pay dividends (last dividend in 2012) contrasts with peers like Thermax and Siemens, which offer modest yields. For growth-focused investors, Schneider's profit retention strategy supports reinvestment, though income investors may find this unappealing.
Valuation Analysis: Expensive Entry Point Despite Strong Fundamentals
Schneider Electric Infrastructure's valuation metrics uniformly signal "Very Expensive" territory, with the stock trading at 77x trailing twelve-month earnings. This represents a substantial premium to the industry P/E of 38x, implying investors are paying double the sector multiple for exposure to Schneider's growth and return profile. The price-to-book ratio of 28.57x similarly reflects elevated expectations, with the stock trading at nearly 29 times its book value of ₹19.13 per share.
The enterprise value multiples paint a consistent picture: EV/EBITDA at 50.15x, EV/EBIT at 54.01x, and EV/Sales at 7.02x all suggest premium pricing. The PEG ratio of 3.12 indicates the stock trades at more than three times its earnings growth rate, traditionally considered expensive territory (PEG above 2.0). Historical context reveals the stock has oscillated between "Expensive" and "Very Expensive" valuations since late 2023, with the current premium valuation persisting for over two years.
From a price perspective, the stock at ₹786.55 trades 25.45% below its 52-week high of ₹1,055.00 (achieved in recent months) but remains 52.23% above the 52-week low of ₹516.70. This positioning suggests partial correction from peak valuations, though the stock remains elevated relative to its recent trading range. The absence of dividend yield eliminates income-based valuation support, placing entire return expectations on capital appreciation.
Shareholding Pattern: Stable Promoter Base, Modest Institutional Interest
Schneider Electric Infrastructure's shareholding structure reveals remarkable stability at the promoter level, with Energy Grid Automation Transformers And Switchgears India Private Limited and Schneider Electric Singapore Pte Ltd collectively maintaining a steady 75.00% stake across recent quarters. This unwavering promoter commitment, with zero pledging of shares, signals strong confidence in the company's long-term prospects and eliminates governance concerns related to promoter funding stress.
Institutional participation remains modest, with foreign institutional investors (FIIs) holding 3.02% as of December 2025, marginally declining from 3.10% in June 2025. Mutual fund holdings stood at 2.58%, down slightly from 2.71% in the previous quarter, suggesting some profit booking by domestic institutional investors following the stock's strong run. Insurance company holdings witnessed a notable decline to 0.18% from 0.79% in March 2025, indicating reduced conviction from this investor category.
| Category | Dec'25 | Sep'25 | Jun'25 | Mar'25 | QoQ Change |
|---|---|---|---|---|---|
| Promoter | 75.00% | 75.00% | 75.00% | 75.00% | 0.00% |
| FII | 3.02% | 3.08% | 3.10% | 3.00% | -0.06% |
| Mutual Funds | 2.58% | 2.71% | 2.44% | 2.21% | -0.13% |
| Insurance | 0.18% | 0.22% | 0.22% | 0.79% | -0.04% |
| Other DII | 0.53% | 0.35% | 0.31% | 0.23% | +0.18% |
| Non-Institutional | 18.69% | 18.63% | 18.93% | 18.77% | +0.06% |
The low institutional holding of just 6.31% (combining FII, mutual funds, insurance, and other DII) suggests limited liquidity and potential volatility, as retail and non-institutional investors control nearly 19% of the free float. The presence of 116 FIIs and 19 mutual funds indicates broad-based interest despite modest aggregate holdings. The marginal increase in "Other DII" holdings to 0.53% from 0.35% provides a small positive signal, though overall institutional participation remains underwhelming for a company of this market capitalisation.
Stock Performance: Strong Long-Term Gains, Recent Consolidation
Schneider Electric Infrastructure's stock performance reveals a tale of two timeframes: exceptional long-term wealth creation contrasted with recent consolidation. Over five years, the stock has delivered a staggering 670.37% return, dramatically outperforming the Sensex's 62.34% gain by 608 percentage points. This translates to a compound annual growth rate exceeding 50%, placing it among the top performers in the industrial sector.
The three-year return of 354.52% (versus Sensex's 37.89%) and four-year gain of 512.58% (versus Sensex's 43.89%) underscore sustained outperformance through multiple market cycles. However, recent performance has moderated significantly. The six-month return stands at -6.98%, underperforming the Sensex's 4.29% gain by 11.27 percentage points. The three-month return of -4.22% similarly trails the market, suggesting profit booking following the stock's remarkable run to ₹1,055 levels.
| Period | Stock Return | Sensex Return | Alpha |
|---|---|---|---|
| 1 Week | 7.35% | 0.43% | +6.92% |
| 1 Month | 22.73% | -0.24% | +22.97% |
| 3 Months | -4.22% | -0.94% | -3.28% |
| 6 Months | -6.98% | 4.29% | -11.27% |
| YTD | 8.89% | -1.81% | +10.70% |
| 1 Year | 15.16% | 9.85% | +5.31% |
| 3 Years | 354.52% | 37.89% | +316.63% |
| 5 Years | 670.37% | 62.34% | +608.03% |
Short-term momentum shows revival, with one-month returns of 22.73% and one-week gains of 7.35% suggesting renewed buying interest. The stock's high beta of 1.34 indicates 34% greater volatility than the broader market, consistent with its classification as a "High Risk Medium Return" investment. The 42.83% annual volatility significantly exceeds the Sensex's 11.44%, reflecting the stock's susceptibility to sharp swings driven by quarterly result surprises and order flow announcements.
Technical Analysis: Sideways Consolidation After Correction
From a technical perspective, Schneider Electric Infrastructure currently exhibits a "Sideways" trend as of February 11, 2026, following a brief "Mildly Bearish" phase. The stock trades above all key moving averages—5-day (₹769.64), 20-day (₹684.51), 50-day (₹702.92), 100-day (₹762.16), and 200-day (₹782.96)—though the proximity to the 200-day moving average suggests limited cushion against further downside.
Technical indicators present mixed signals: Bollinger Bands flash "Bullish" on both weekly and monthly timeframes, whilst the Moving Average Convergence Divergence (MACD) shows "Mildly Bullish" weekly but "Mildly Bearish" monthly readings. The On-Balance Volume (OBV) indicator remains "Bullish" across timeframes, suggesting accumulation despite price consolidation. However, the Know Sure Thing (KST) oscillator signals "Bearish" weekly and "Mildly Bearish" monthly, indicating potential momentum weakness.
Delivery volumes have surged, with the one-month delivery change at 65.71%, indicating higher conviction-based buying. Recent delivery volume of 1.15 lakh shares (43.89% of total volume) exceeds the five-day average, though remains below the trailing one-month average. The stock's immediate support rests at the 52-week low of ₹516.70, whilst resistance emerges around the 20-day moving average zone of ₹684.51, with major resistance at ₹762.16 (100-day MA) and ₹782.96 (200-day MA).
Investment Thesis: Quality Business, Valuation Concerns
Schneider Electric Infrastructure presents a compelling yet complex investment proposition, characterised by exceptional operational fundamentals constrained by demanding valuation multiples. The company's "Good" quality grade reflects strong long-term financial performance, with five-year sales CAGR of 16.07% and EBIT growth of 67.79% demonstrating successful business model transformation. The average ROE of 73.96% and ROCE of 24.50% place the company among the most capital-efficient manufacturers in India.
The financial trend remains "Positive" as of December 2025, supported by record quarterly revenue, highest-ever operating profit, and improving cash generation. Key strengths include debt-free promoter holdings (zero pledging), manageable net debt-to-equity of 0.38, and strong order execution capabilities. The company's transformation from losses in FY20-21 to consistent double-digit margins demonstrates management's operational competence and market positioning improvements.
However, the "Very Expensive" valuation grade represents a significant headwind, with the stock trading at 77x earnings compared to the industry average of 38x. The PEG ratio of 3.12 suggests investors are paying a substantial premium for growth that may already be priced in. Low institutional holdings of 6.31% and absence of dividend yield further limit the stock's appeal to certain investor categories. The technical "Sideways" trend and high volatility (42.83%) add to near-term uncertainty.
Key Strengths & Risk Factors
KEY STRENGTHS
- Exceptional Capital Efficiency: ROE of 73.96% and ROCE of 38.85% demonstrate outstanding profitability and capital deployment, significantly exceeding industry benchmarks.
- Strong Revenue Momentum: Q3 FY26 revenue of ₹1,029.17 crores (up 58.30% QoQ, 20.06% YoY) reflects robust order book execution and market demand.
- Margin Expansion: Operating margin improved to 16.77% from 12.89% QoQ, demonstrating operational leverage and pricing power.
- Robust Cash Generation: Operating cash flow of ₹307 crores in FY25 (up 62.43% YoY) with closing cash of ₹258 crores provides financial flexibility.
- Stable Promoter Base: 75% promoter holding with zero pledging signals strong management confidence and eliminates governance concerns.
- Transformation Success: Journey from losses in FY20-21 to consistent profitability with 10.1% PAT margins demonstrates effective turnaround execution.
- Sectoral Tailwinds: Positioned to benefit from India's infrastructure investment cycle, grid modernisation, and renewable energy integration.
KEY CONCERNS
- Premium Valuation: Trading at 77x P/E (2x industry average) and PEG of 3.12 leaves limited margin for disappointment, demanding sustained high growth.
- Elevated Leverage: Debt-to-EBITDA of 4.97x and long-term debt of ₹427.78 crores represent significant financial obligations despite improving coverage ratios.
- YoY Profit Decline: Q3 net profit down 12.21% YoY from exceptional base quarter highlights earnings volatility and lumpy order execution patterns.
- Low Institutional Holding: Just 6.31% institutional ownership limits liquidity and increases volatility risk, with limited analyst coverage.
- No Dividend Policy: Absence of dividends since 2012 eliminates income component of returns, making valuation entirely dependent on capital appreciation.
- High Volatility: Beta of 1.34 and annual volatility of 42.83% (versus Sensex's 11.44%) indicate significant price fluctuation risk.
- Working Capital Intensity: Current liabilities of ₹805.86 crores and substantial trade receivables create working capital management challenges.
Outlook: What Lies Ahead
POSITIVE CATALYSTS
- Sustained order inflows from government infrastructure programmes driving revenue visibility
- Further margin expansion as operating leverage benefits materialise with scale
- Debt reduction from strong cash generation improving financial flexibility
- Potential re-rating if institutional participation increases with improved liquidity
- Market share gains in grid modernisation and renewable integration segments
RED FLAGS TO MONITOR
- Valuation compression if growth momentum slows or margins contract from current levels
- Order book depletion without adequate replacement leading to revenue volatility
- Raw material cost inflation (copper, steel) impacting margins if price pass-through weakens
- Further institutional selling or promoter stake dilution signalling confidence loss
- Working capital deterioration increasing debt levels and interest burden
The Verdict: Quality Business at Premium Price
Score: 54/100
For Fresh Investors: Avoid initiating positions at current valuations. The stock's 77x P/E and 3.12 PEG ratio offer limited margin of safety despite strong fundamentals. Wait for meaningful correction towards ₹650-700 levels (representing 20-25% downside) or evidence of sustained earnings acceleration justifying premium multiples. Better risk-reward opportunities exist in the sector at more reasonable valuations.
For Existing Holders: Continue holding with trailing stop-loss around ₹750 (200-day moving average). The company's operational excellence and sectoral positioning support long-term wealth creation, though near-term returns may remain muted. Consider partial profit booking above ₹850 if the stock rallies without corresponding earnings growth. Maintain positions only if conviction in sustained 20%+ earnings CAGR remains intact.
Fair Value Estimate: ₹650-700 (17-23% downside from current levels), representing 55-60x forward earnings based on FY27 estimates assuming continued margin improvement and order book conversion.
Note— ROCE= (EBIT - Other income)/(Capital Employed - Cash - Current Investments)
⚠️ Investment Disclaimer
This article is for educational and informational purposes only and should not be construed as financial advice. Investors should conduct their own due diligence, consider their risk tolerance and investment objectives, and consult with a qualified financial advisor before making any investment decisions.
