Automotive Axles (505010) Q2 24/25 earnings summary

Executive summary

• Despite a soft market, operational cost optimization led to strong performance in Q2 FY25, with continued investment in automation and new product launches, notably the MS185 axle for Ashok Leyland.

• Management remains focused on medium and heavy commercial vehicles, maintaining leadership as the largest independent axle manufacturer in India.

• Board approved unaudited financial results for the quarter and half year ended September 30, 2024, and revised the Code of Conduct for Insider Trading and Fair Disclosure of Unpublished Price Sensitive Information.

• Independent auditor's review found no material misstatements in the financial results.

Financial highlights

• Q2 FY25 sales were ₹4,946.84 million, down 15% year-over-year from ₹5,844.11 million in Q2 FY24.

• Net profit for Q2 FY25 was ₹359.73 million, down from ₹450.88 million in Q2 FY24.

• EBITDA margin was 11.4% versus 11.9% last year; EBIT margin at 9.7% compared to 10.3%.

• H1 FY25 sales were close to ₹10,000 million, down 11% from ₹11,220 million in H1 FY24.

• H1 FY25 EBITDA margin improved to 11.6% from 11.2% last year.

Outlook and guidance

• Market expected to remain flat for the rest of FY25, with a possible 5-10% upside in volumes in H2 depending on market and inventory conditions.

• FY26 is expected to be flat with potential for 10% upside; 15-20% industry growth projected over the next three to four years.

• Management continues to review operations as a single segment: automotive components manufacturing.

• EBITDA margins expected to remain consistent, with potential improvement if market volumes rise.