Current Rating and Its Significance
The 'Sell' rating assigned to Schaeffler India Ltd indicates a cautious stance for investors considering this stock at present. This recommendation is based on a comprehensive evaluation of four key parameters: Quality, Valuation, Financial Trend, and Technicals. While the rating was revised earlier this year, it is essential to understand what this means for investors today, given the latest data and market conditions.
Quality Assessment
As of 14 February 2026, Schaeffler India Ltd maintains a good quality grade. This reflects the company’s solid operational framework and consistent profitability metrics. The return on equity (ROE) stands at a robust 18.6%, signalling effective utilisation of shareholder funds. However, the company’s long-term growth trajectory has been modest, with operating profit growing at an annualised rate of 8.21% over the past five years. This moderate growth rate suggests that while the company is stable, it may not be expanding aggressively enough to excite growth-focused investors.
Valuation Considerations
Valuation is a critical factor influencing the current 'Sell' rating. Schaeffler India Ltd is classified as very expensive based on its price-to-book (P/B) ratio of 10.9. This elevated valuation implies that the stock is trading at a significant premium compared to its book value, which may limit upside potential. Although the stock’s valuation is in line with its peers’ historical averages, the premium is notable given the company’s moderate growth profile. The price-to-earnings-growth (PEG) ratio of 3.4 further underscores that the stock’s price growth is outpacing earnings growth, which can be a warning sign for value-conscious investors.
Financial Trend and Performance
The financial trend for Schaeffler India Ltd remains positive as of today. The company has demonstrated profit growth of 16.5% over the past year, which is a healthy indicator of operational efficiency and market demand. Correspondingly, the stock has delivered a strong 1-year return of 25.60%, outperforming many peers in the auto components sector. However, shorter-term returns have been mixed, with a 3-month decline of 8.20% and a 6-month dip of 3.01%, reflecting some volatility and market uncertainty. Year-to-date, the stock has declined by 2.37%, indicating recent pressure on the share price despite the longer-term gains.
Technical Analysis
From a technical perspective, the stock is currently rated as mildly bearish. This suggests that recent price movements and chart patterns indicate some downward momentum or consolidation. The daily change as of 14 February 2026 was -0.40%, and the weekly change was -0.63%, reinforcing the cautious technical outlook. Investors relying on technical signals may interpret this as a sign to avoid initiating new positions or to consider reducing exposure until clearer bullish trends emerge.
Sector and Market Context
Schaeffler India Ltd operates within the Auto Components & Equipments sector, a segment that has faced mixed headwinds due to fluctuating demand in the automotive industry and supply chain challenges. The company’s midcap status places it in a competitive position where growth prospects must be balanced against valuation and market sentiment. The current Mojo Score of 48.0, down from 64.0 in early January, reflects this tempered outlook and supports the 'Sell' rating.
Implications for Investors
For investors, the 'Sell' rating signals that Schaeffler India Ltd may not be an attractive buy at current levels, primarily due to its high valuation and mild bearish technical signals despite decent financial performance. The stock’s premium pricing relative to book value and a PEG ratio above 3 suggest that expectations are already priced in, leaving limited margin for error. Investors seeking growth might find better opportunities elsewhere, while those focused on value should be cautious given the stock’s expensive multiples.
That said, the company’s strong ROE and positive profit growth indicate underlying operational strength, which could provide a foundation for future recovery if market conditions improve. Monitoring changes in valuation, technical trends, and sector dynamics will be crucial for reassessing the stock’s attractiveness over time.
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Summary and Outlook
In summary, Schaeffler India Ltd’s current 'Sell' rating by MarketsMOJO reflects a balanced assessment of its strengths and challenges as of 14 February 2026. The company’s good quality and positive financial trend are offset by very expensive valuation and mildly bearish technical indicators. Investors should weigh these factors carefully, recognising that while the stock has delivered solid returns over the past year, its premium pricing and recent price softness warrant caution.
Going forward, any improvement in valuation metrics or a shift in technical momentum could prompt a reassessment of the rating. Until then, the 'Sell' recommendation serves as a prudent guide for investors to consider alternative opportunities or to monitor the stock closely before committing fresh capital.
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