This auto parts and equipment company surged 13.3% to Rs 730 per share on Thursday, following its strong second-quarter results. The company has also signed an agreement to acquire the Railway Equipment Division (RED) of Escorts Kubota (EKL) for Rs 1,600 crore in cash. RED is a key supplier of essential components for railways, such as brakes and suspension systems for rolling stock.
For the quarter ending September 30, 2024 (Q2FY25), Sona BLW (Sona Comstar) posted a 16.2% YoY rise in net profit, to Rs 143.9 crore. Revenue from operations increased by 18.7% to Rs 946.1 crore, up from Rs 796.9 crore in Q2FY24. Both revenue and net profit exceeded Trendlyne’s Forecaster estimates by 4.5% and 2.4%, respectively. At the operating level, EBITDA rose by 14.2% YoY to Rs 254.9 crore, while the EBITDA margin narrowed slightly by 33 basis points YoY to 28%.
Battery electric vehicles (BEVs) contributed 36% of the company’s revenue, with BEV revenue increasing by 53% YoY in the July-September period. The company also reported a net order book of Rs 23,100 crore as of September 30, 2024. Vivek Vikram Singh, the MD & Group CEO commented, "We are cautiously optimistic about our growth prospects, especially in the EV sector, even though there are slowdowns in specific markets like Europe and Indian two-wheelers." The company has intensified its focus on the electric vehicle (EV) market, with significant order wins including a driveline program for a class-5 electric truck and an in-cabin sensing product, signalling expansion and diversification of its product portfolio.
Following the two developments, the Hong Kong-based brokerage CLSA upgraded Sona BLW to ‘Outperform,’ raising the target price to Rs 712 from Rs 690. The company’s operating performance met expectations, and its acquisition of EKL’s railway component business is seen as a key driver for future profitable growth.
However, CLSA highlighted a potential slowdown in Sona BLW’s core business, and the importance of exploring inorganic growth opportunities. Revenue from the newly acquired railway division is expected to start contributing from FY26.
This IT software company surged 10.9% on October 23, reaching an all-time high of Rs 5,798.7 after announcing its Q2FY25 results. The company’s net profit grew by 6.1% QoQ to Rs 325 crore in Q2FY25, while its revenue increased by 5.8% to Rs 2,897.2 crore, driven by strong growth in the BFSI (which constitutes ~32% of total revenue) and healthcare & life sciences (28% of the revenue) segments. However, the software, hi-tech & emerging industries segment (which constitutes 40% of the revenue) saw a muted growth of 1.4% during the quarter. Both net profit and revenue beat estimates by 4% and 1.2% respectively.
In terms of geographies, North Americas and Europe revenue grew by 6.4% and 6% QoQ, respectively, while India revenue grew by 1%. During the quarter, Persistent's total contract value (TCV) stood at Rs 4,400 crore ($529 mn), with Rs 2,574 crore from new deal wins.
The company has outperformed its larger IT peers in profit growth. For instance, TCS reported a 1.1% QoQ decline in net profit during the quarter, while Infosys saw a 2.2%increase. Persistent has also outperformed its industry price change by 15.8% during the quarter.
The company plans to acquire Arrka Solutions, a data privacy management firm, to enhance its offerings in data privacy, AI governance and cybersecurity. In FY24, Arrka reported Rs 2.9 crore in revenue.
Persistent Systems maintained a flat EBIT margin of 14% from the previous quarter. CEO Sandeep Kalra said, “With the growth and cost-saving programs at Persistent, we are sticking to our target of expanding margins by 200-300 basis points over the next two years, and expect all three verticals to contribute as growth enablers.”
Post-results, Axis Direct assigns a ‘Buy’ rating to Persistent, citing strong long-term growth potential due to multiple contracts with leading brands and improved revenue visibility. However, the brokerage also mentions worries about global growth, and supply issues that could affect the company's short-term prospects.
This electrical equipment maker has declined by 6.1% in the past week following the announcement of its Q2FY25 results on October 17. During the quarter, net profit missed Trendlyne’s Forecaster estimates by 15.2% despite growing by 7.7% YoY to Rs 268.2 crore. The company’s EBITDA margins contracted by 131bps to 8.3% mainly due to a sharp increase in ad-spends, and volatility in raw material prices.
The management expects margins to normalize in the upcoming quarters, reaching 13-14%, excluding Lloyd in Q3 and Q4. Anil Rai Gupta, the CMD said, “As the festival season is slightly earlier this year, we witnessed higher advertising spends, moderating margins across categories. We expect normalization over subsequent quarters”. EBITDA margins have witnessed a sequential decline, and stood at 9.9% in Q1, and 11.7% in Q4FY24, lower than analysts' estimates. Gupta highlighted that the company has experienced lower margins due to fluctuating raw material prices.
Meanwhile, revenue increased by 16.4% YoY to Rs 4,539.3 crore, driven by the cables & wires (C&W), switchgear, and electrical consumer durables segments. The cables and switchgear segments (constituting over half of the revenue) witnessed healthy growth led by a pick-up in demand ahead of the festive season.
During the quarter, revenue in the Llyod Consumer segment (~13% of the revenue) also saw healthy growth, led by the non-RAC segment, which includes LED panels, refrigerators, and washing machines. The management aims for the Lloyd segment to contribute around 20% to Havells’ India revenue.
Going forward, the management expects revenue growth to be driven by residential demand and festive demand. The CMD highlighted that channel expansion and product addition by the company are also likely to contribute to revenue growth. In Q2, Havells India commissioned a new cable plant in Tumkur for the production of higher-sized cable. Due to the higher demand for the product, the company has committed an additional capex of Rs 450 crore to expand the facility. The capex planned for H2FY25 is Rs1,000 crore.
ICICI Securities remains positive on Havells due to its established competitive advantages and growth opportunities in white goods and durables. The brokerage maintains its ‘Buy’ rating with a target price of Rs 2,120.
This cement & cement products company rose by over 3% on 24th October, as its wholly owned subsidiary Dalmia Cement (Bharat) (DCBL) signed a Share Purchase & Shareholders Agreement (“SPSA”), to acquire a 5.4% stake in Atria Wind Power (Basavana Begawadi, Karnataka) to source wind power as a captive consumer for its capacity of 6 MW located in Karnataka.
The company declared its Q2FY25 results on 21st October. Its net profit declined by 61% YoY to Rs 46 crore due to lower realization, along with plant maintenance & shutdowns, while its revenue declined by 2.3%. The firm missed Trendlyne’s Forecaster estimates for revenue by 1.4% and the net profit estimate by 41.2%. Despite the weak result, the stock appears in a screener for stocks showing relative outperformance versus industry over 1 month period.
In Q2FY25, the company was impacted by a 9% YoY decline in realization, down to Rs 4,607/tonne, which negatively affected its EBITDA margin, which at 14.1%, was the lowest in several years. The company’s cost/tonne decreased by 4% YoY to Rs 3,960, driven by lower freight and inventory adjustments. Its volume growth was 8%, which was better than expected owing to a lower base last year and the commissioning of new capacity in H1FY25.
Analysts remain optimistic about the company despite these speedbumps, noting that the market share of major cement players has risen from 46% in 2013 to 55% in 2024, with projections suggesting it could reach 60% by FY26-27. As top companies continue to consolidate and expand their capacities, their overall market share is expected to grow, positively impacting cement pricing, economies of scale, and supply chain efficiency. Being among the top five players in the country, the company is well-positioned to capitalize on this consolidation in the medium to long term. But the competition in the sector is intense.
The company’s CEO and Managing Director Puneet Dalmia guides a 9% volume growth, with EBITDA/tonne in the range of Rs 900-950 in H2FY25. He projects cement prices to trend slightly higher, while expecting operating efficiency to contribute Rs 150-200 in cost savings over the next three years. The company management plans to improve EBITDA margins to 18.5% by enhancing operating efficiency and clinker capacity from the current 22.4 mtpa to 27.1 mtpa, which is expected to be commissioned in FY26.
Axis Securities has retained a ‘Buy’ rating on Dalmia Bharat with a target price of Rs 2,040. The brokerage projects the company will grow its Volume/Revenue/EBITDA at a CAGR of 9%, 7%, 9% respectively over FY25-FY26. It adds that with the current capacity utilisation at 58%, there is substantial scope for the company to increase its utilisation levels.
Thisfurnishing company fell 5% on October 22 after announcing itsQ2FY25 results. The company’s net profit declined 22.8% YoY to Rs 85.5 crore, missingTrendlyne’s Forecaster estimates by 20.2%. However, revenue rose by 5.1% to Rs 1,179.3 crore. Demand for tiles was subdued in Q2FY25 due to excessive rainfall in August and September across India. Despite the weak demand environment, Kajaria's tile volumegrew by 8.5% to 28.7 million square meters (MSM).
Kajaria Ceramics generates most of its revenue from tiles, which accounts for 88% to 93% of total revenue. In Q2FY25, tiles accounted for approximately 88% of the total revenue. The remaining revenue comes from non-tiles segments, which include bathware (Rs 90.1 crore, 8% of total revenue), adhesives (Rs 18.2 crore), and plywood (Rs 17.5 crore).
Ashok Kajaria, Chairman and Managing Director of the companysaid, “The second half will be better than quarter one and quarter two. So we are looking at a 9-10% volume growth for the full year (FY25) and margin guidance would be 15-17% this year.” Over the longer term, management believes they can achieve a CAGR of 11.5% for tile volumes from FY25 to FY27, leading to a total volume of 150 MSM. As part of their three-year vision, Kajaria Ceramics aims to expand its reach to over 2,000 towns across India, up from the current presence in 1,000 towns.
Post results, ICICI Directmaintains its ‘Buy’ rating with a target price of Rs 1,500. The brokerage expects the company’s tile volume and revenue to grow at around 10% annually between FY25 and FY27. EBITDA margins are projected to be 15% in FY25, and 15.8% in FY26.
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