SONACOMS Q2 FY25 earnings call.
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Revenue
₹922 Cr
verified against source
Revenue YoY
17%
reported change
EBITDA
₹255 Cr
latest reported figure
Source
screener in
record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Sona Comstar delivered its highest-ever quarterly revenue of INR 925 crore (up 17% YoY) and EBITDA of INR 255 crore (up 14% YoY), with adjusted PAT at INR 158 crore, up 23% YoY. BEV revenue surged 53% to INR 317 crore, constituting 36% of total revenue—the highest ever. The order book stands at INR 231 billion, with 78% from EV programs. The major strategic announcement is the acquisition of Escorts Kubota Railway Equipment Division (RED) for INR 1,600 crore at ~18.8% EBIT margin, expected to be EPS-accretive from Year 1. RED generated ~INR 950 crore revenue in FY24 with 19% CAGR over five years. Mexico plant production expected to start Q2/Q3 2025. Return ratios declined due to recent INR 2,400 crore QIP raise, which management views as temporary. Risks include India CV demand weakness, European slowdown, and execution challenges on 29 not-yet-in-production programs with typical 18-24 month lag to SOP.
Colored figures show movement against the previous available record.
Guidance to track
- The railway equipment division acquisition at INR 1,600 crore enterprise value is expected to be earnings accretive from the first year of ownership, with RED's FY24 revenue at ~INR 950 crore and EBIT at ~INR 179 crore (18.8% EBIT margin).
- Most programs in the INR 231 billion order book will start production by FY2027, with SOPs beginning 2027 calendar year. Programs starting later than 2028 would be exceptionally unusual.
- ROCE and ROE declined due to INR 2,400 crore QIP proceeds received in September 2024. Management expects these ratios to improve as cash is deployed into growth initiatives including the RED acquisition and capacity expansion.
Risks flagged
- India CV demand has been especially acute, causing revenue share from this segment to decline from 14% to 10% in H1. Management acknowledged this as a headwind affecting near-term revenue composition.
- One European EV program SOP has been delayed by approximately 9-12 months. Additionally, one Indian EV two-wheeler program has been delayed by six months. These delays could impact revenue recognition timing from the order book.
- Non-automotive revenue share declined from 12% in H1 FY24 to 9% in H1 FY25 due to weakness in off-highway segment in both US and India markets. This represents a diversification headwind.
- Analyst Gunjan questioned whether the INR 231 billion order book would translate to revenues over 3-4 years as assumed. Management confirmed most programs begin by FY2027 but acknowledged auto delays happen due to economic conditions or customer readiness—visibility beyond stated timelines is limited.
Key quotes
- 12 months into the EV slowdown narrative, our overall growth continues to be driven by BEV revenue. It has grown a staggering 53% last quarter, and its share in revenue has increased to the highest ever at 36%, which goes to show that sometimes narrative does trump data, but numbers are numbers.
- The railway industry presents long-term growth opportunities. Indian Railways has the second-largest railway network in Asia and fourth-largest globally. The railway component market in India offers significant opportunity due to considerable entry barriers, especially in critical products like brakes.
- This acquisition aligns with our goal of promoting clean mobility. Railways are among the most green and clean modes of motorized transport today. We will acquire RED at enterprise value of INR 16 billion, expected to be EPS accretive from year one itself.
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