Sona BLW Precision Forgings (SONACOMS) Q2 24/25 earnings summary

Executive summary

• Announced acquisition of Escorts Kubota Limited/EKL Railway Equipment Division for INR 16 billion, expanding into railway mobility and diversifying beyond automotive; expected to be EPS accretive from year one.

• RED/EKL is a market leader in railway brakes in India, with a robust product portfolio and strong financials.

• Q2 FY25 revenue grew 17% year-over-year to INR 9,251 million, with BEV revenue up 53% and now 36% of total revenue.

• PAT increased 16% year-over-year in Q2 FY25 to INR 1,439 million, with a PAT margin of 15.5%.

• Net order book at INR 231 billion, with 78% from EV programs; most programs to start by FY27.

Financial highlights

• H1 FY25 revenue up 19% year-over-year to INR 18,181 million; EBITDA up 19% to INR 5,061 million with a 27.8% margin.

• H1 FY25 PAT grew 21% to INR 2,859 million; PAT margin at 15.7%.

• Free cash flow for H1 was INR 2,433 million, with CapEx spend of INR 224 crore.

• Adjusted EBITDA and PAT margins improved due to lower input costs, operating leverage, and net finance income.

• Cash and cash equivalents at 30 September 2024 were INR 4,759.70 million.

Outlook and guidance

• RED/EKL acquisition aligns with diversification and clean mobility strategy, targeting long-term growth and expected to be EPS accretive from the first year.

• Net order book at INR 231 billion, 7.3x FY24 revenue, with 78% from EV programs; most programs to start by FY27.

• Management expects return ratios to improve as recent capital raised is deployed.