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

Executive summary

• Announced acquisition of Escorts Kubota Limited Railway Equipment Division (RED) for INR 16 billion, diversifying into railway mobility and clean transport, and expected to be EPS accretive from year one.

• RED 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.

• H1 FY25 revenue rose 19% year-over-year to INR 18,181 million, with EBITDA up 19% and PAT up 21%.

• QIP raised INR 24,000 million, strengthening the balance sheet and enabling growth investments.

Financial highlights

• Q2 FY25 EBITDA was INR 2,549 million (14% YoY growth), with a margin of 27.6%; PAT was INR 1,439 million (16% YoY growth), margin at 15.5%.

• H1 FY25 EBITDA reached INR 5,061 million (19% YoY growth), margin at 27.8%; PAT was INR 2,859 million (21% YoY growth), margin at 15.7%.

• Free cash flow from operations in H1 FY25 was INR 2,433 million, with CapEx spend of INR 224 crore.

• Adjusted PAT grew 23% to INR 158 crore, with adjusted EBITDA margin improving by 20 bps.

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

Outlook and guidance

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

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

• Growth strategy includes developing innovative products and expanding into new mobility segments.