Harsha Engineers International (HARSHA) Q2 24/25 earnings summary

Executive summary

• Q2 FY25 saw mixed performance: India and China improved, while Europe and the U.S. faced demand softness; consolidated revenue grew 3.9% YoY, with margins compressed due to lower operating margins in Engineering.

• Bronze bushing business delivered strong growth, with Q2 sales at INR 24 crore and H1 at INR 44 crore, slightly above expectations.

• Overseas subsidiaries posted a combined net loss of around ₹4 crores in Q2 FY25, mainly due to continued softness in Romania.

• Solar business contributed a one-off profit of INR 1.5 crore in Q2, boosting EBITDA and PAT margins.

• Unaudited standalone and consolidated financial results for the quarter and half year ended September 30, 2024, were approved by the Board on November 11, 2024.

Financial highlights

• Q2 FY25 consolidated revenue from operations was ₹35,258 lakh, with PAT of ₹2,896 lakh and EBITDA margin of 15.3%.

• H1 FY25 consolidated revenue was ₹69,574 lakh, up from ₹68,745 lakh in H1 FY24; PAT was ₹6,501 lakh, up from ₹4,497 lakh YoY.

• Solar business revenue in Q2 was ₹4,262 lakh with EBITDA of ₹3.68 crore.

• Working capital cycle at 151 days, slightly improved from 153 days last quarter; H1 FY25 receivables at 81 days, inventories at 96 days, trade creditors at 26 days.

• CapEx incurred in Q2 was INR 34.7 crore.

Outlook and guidance

• Second half, especially Q4, is expected to be stronger with demand normalization anticipated and "China + 1" factor to positively impact India operations.

• India engineering business is expected to achieve higher single-digit top-line growth for FY25; consolidated top-line growth projected in the mid-single-digit range.

• Bottom-line growth is expected to be higher, in line with H1 FY25 run rate.

• Greenfield CapEx project is on track for Q4 FY25 commissioning, with medium- to long-term margin profile expected to align with current India levels.

• New product development and operational efficiency remain key focus areas.