Harsha Engineers International (HARSHA) Q1 24/25 earnings summary

Executive summary

• Q1 FY25 performance aligned with expectations, with muted top line growth but strong profitability and EBITDA margin expansion compared to Q1 FY24, despite continued weakness in Romania.

• India engineering business sustained well, with notable growth in the bronze bushing segment and nearly 100 new products developed in Q1 FY25.

• China operations delivered strong topline and positive bottom line, while Romania showed progress in strategic shift and is expected to turn positive by Q4 FY25.

• Unaudited standalone and consolidated financial results for Q1 FY25 were approved and reviewed with an unmodified opinion from auditors.

• Greenfield project commissioning remains on track for Q4 FY25.

Financial highlights

• Consolidated revenue for Q1 FY25 was ₹35,106 lakh, compared to ₹34,796 lakh in Q1 FY24 and ₹38,815 lakh in Q4 FY24.

• Consolidated EBITDA for Q1 FY25 was ₹6,307 lakh (18.4% margin), up from ₹4,582 lakh (13.2%) in Q1 FY24.

• Consolidated PAT for Q1 FY25 was ₹3,605 lakh (10.5% margin), up from ₹2,458 lakh (7.1%) in Q1 FY24.

• Gross margin improved from 44% in Q4 FY24 to 51% in Q1 FY25, driven by product mix, lower raw material prices, and better subsidiary performance.

• CapEx of INR 42 crore incurred in Q1 FY25.

Outlook and guidance

• FY25 guidance maintained: top line growth of 10%+ over FY24, with much higher bottom line growth expected.

• Romania expected to achieve positive operating margins from Q4 FY25 as customer engagement initiatives gain traction.

• Long-term strategic guidance remains at 10%-15% top line CAGR, with margin improvement targeted.

• Management remains focused on margin improvement, new product development, and expanding the customer base, especially in the EV and specialized components segments.

• Greenfield project on schedule for Q4 FY25 commissioning, supporting future growth.