Current Rating and Its Significance
MarketsMOJO’s 'Sell' rating for Schaeffler India Ltd indicates a cautious stance towards the stock, suggesting that investors may want to consider reducing exposure or avoiding new purchases at this time. This recommendation is based on a comprehensive evaluation of multiple factors including the company’s quality, valuation, financial trend, and technical indicators. The rating was revised on 09 Jan 2026, reflecting a shift in the overall assessment, but it is essential to understand the stock’s present-day fundamentals and market behaviour as of 23 January 2026.
Quality Assessment
As of 23 January 2026, Schaeffler India Ltd maintains a good quality grade. This suggests that the company exhibits solid operational metrics and a stable business model within the Auto Components & Equipments sector. The firm’s return on equity (ROE) stands at a robust 18.6%, signalling efficient utilisation of shareholder capital. However, despite this strength, the company’s operating profit growth over the past five years has been modest, averaging an annual rate of 8.21%. This relatively slow growth rate indicates challenges in scaling profitability at a pace that might excite growth-oriented investors.
Valuation Considerations
Valuation remains a key concern for Schaeffler India Ltd, with the stock currently graded as very expensive. The price-to-book (P/B) ratio is notably high at 10.4, reflecting a premium valuation relative to the company’s book value. While the stock trades at a discount compared to its peers’ average historical valuations, this elevated P/B ratio suggests that the market has priced in significant expectations for future growth or profitability. The price-earnings-to-growth (PEG) ratio of 3.2 further indicates that the stock may be overvalued relative to its earnings growth potential, which could limit upside for investors seeking value opportunities.
Financial Trend and Performance
The financial trend for Schaeffler India Ltd is currently positive. The latest data as of 23 January 2026 shows that the company’s profits have risen by 16.5% over the past year, a healthy increase that outpaces the stock’s 6.82% return during the same period. This divergence suggests that while the company is improving its earnings, the market has not fully rewarded the stock price commensurately. However, the stock’s recent price performance has been mixed, with a year-to-date decline of 8.33% and a six-month drop of 15.49%, reflecting some investor caution amid broader market volatility.
Technical Outlook
From a technical perspective, Schaeffler India Ltd is currently rated as bearish. The stock has experienced downward momentum in recent weeks, with a one-week decline of 7.11% and a one-month drop of 6.18%. This technical weakness may be indicative of short-term selling pressure or profit-taking by investors. The bearish trend suggests that the stock could face resistance in mounting a sustained recovery without positive catalysts or improved market sentiment.
Summary of Stock Returns
As of 23 January 2026, Schaeffler India Ltd’s stock returns present a mixed picture. While the one-year return is a positive 6.82%, shorter-term returns have been negative, including a 0.28% decline on the most recent trading day and a 15.49% fall over six months. This volatility underscores the importance of considering both fundamental and technical factors when evaluating the stock’s prospects.
Implications for Investors
The 'Sell' rating from MarketsMOJO reflects a cautious outlook on Schaeffler India Ltd, driven primarily by its expensive valuation and bearish technical signals despite decent quality and positive financial trends. Investors should weigh the company’s solid ROE and profit growth against the premium price multiples and recent price weakness. For those holding the stock, this rating suggests prudence in monitoring market developments and considering risk management strategies. Prospective investors might prefer to await a more attractive valuation or a technical turnaround before initiating positions.
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Sector and Market Context
Schaeffler India Ltd operates within the Auto Components & Equipments sector, a segment that has faced cyclical pressures due to fluctuating demand in the automotive industry and supply chain disruptions. The company’s midcap status places it in a category where growth potential is balanced by higher volatility compared to large caps. Investors should consider sector trends, including shifts towards electric vehicles and changing regulatory environments, which may impact future earnings and valuations.
Conclusion
In conclusion, Schaeffler India Ltd’s current 'Sell' rating by MarketsMOJO, effective from 09 January 2026, is grounded in a thorough analysis of the company’s present-day fundamentals as of 23 January 2026. While the company demonstrates good quality and positive financial trends, its very expensive valuation and bearish technical outlook warrant caution. Investors should carefully assess their risk tolerance and investment horizon before making decisions related to this stock, keeping in mind the broader market and sector dynamics.
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