Earnings Outlook
Sona BLW Oct-Dec earnings seen muted on low EV demand
This story was originally published at 15:46 IST on 21 January 2025
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By Avishek Rakshit
KOLKATA – Sona BLW Precision Forgings Ltd. is expected to report a year-on-year increase in its consolidated revenue and net profit for the December quarter, but the rise could be muted on account of a slowdown in order book execution.
The automotive technology company is expected to report an 8.7% on-year jump in its net profit to INR 1.4 billion and a 10.2% increase in revenue to INR 8.6 billion, according to an average of estimates from five brokerages. Sequentially, however, the profit is estimated to be flat with the revenue seen declining by 6.6%.
Sona BLW posted a net profit of INR 1.3 billion in the year-ago quarter and INR 1.4 billion in the September quarter. The revenue was INR 7.8 billion a year ago and INR 9.2 billion in the September quarter.
Amongst brokerages, Nuvama Wealth Management Ltd. has given the highest revenue estimate at INR 8.9 billion and Nomura Equity Research the lowest at INR 8.5 billion. Elara Securities (India) Pvt. Ltd. projected the highest profit estimate at INR 1.5 billion and Nomura Equity Research the lowest at INR 1.4 billion.
Sona BLW will declare its earnings for the December quarter on Jan. 23.
Motilal Oswal Financial Services Ltd. said Sona BLW is expected to see some slowdown in its order deliveries due to a weakness in global markets and a slower transition to electric vehicles globally. As on Sept. 30, Sona BLW had an order book of INR 231 billion, with 78% of the order book coming in from the electric vehicles segment.
Although electric vehicles are deemed to be greener as compared to vehicles powered by petrol and diesel, EVs are priced much higher than petrol and diesel variants, dampening demand for these vehicles. Sector analysts said the cost of batteries, which account for around 40% of the vehicle's price, and home charging systems continue to be high. Commercial EVs were launched more than a decade back at a premium price as compared to petrol and diesel variants, and consumers then had expected the price of technology to come down. However, that has not happened. Usually, new technology is priced higher when it is launched, but the price gradually comes down over the years as volumes pick up.
There has also not been any remarkable progress on the EV charging infrastructure, and the resale value of EVs is also a deterrent towards the adoption of EVs globally. During Apr-Sept, batteries for EVs accounted for 35% of Sona BLW's revenues.
The stock is currently down 13.6% from the level when the company announced its September quarter earnings on Oct. 23. On the day of its earnings, the stock closed marginally higher but opened up 3% on the following day and ended at INR 729, up 13% after hitting a high of INR 744, up 15%.
On Tuesday, shares of Sona BLW ended 1.8% lower at INR 556.40 on the National Stock Exchange.
Nuvama said Sona BLW's revenue growth on year will most likely be driven by its North American and Indian businesses. Sona BLW earned 44% of its revenue from North America in Apr-Sept, followed by 28% from domestic operations. Europe accounted for 22% of the revenue, and the rest came from other countries.
Sona BLW is expected to report earnings before interest, tax, depreciation, and amortisation of INR 2.3 billion in Oct-Dec as against INR 2.5 billion a quarter ago, according to the average of estimates from five brokerages. Nuvama has the highest estimate for EBITDA at INR 2.4 and Nomura has the lowest estimate at INR 2.3 billion.
Following are the Oct-Dec earnings estimates for Sona BLW based on reports from five brokerage firms in descending order by the estimate of net profit:
Broker Name | Net Sales (in million rupees) | Net Profit (in million rupees) | EBITDA (in million rupees) |
Elara Securities (India) Pvt Ltd | 8,542.00 | 1,506.00 | 2,332.00 |
Nuvama Wealth Management Ltd | 8,881.00 | 1,500.00 | 2,439.00 |
JM Financial Institutional Securities Pvt Ltd | 8,511.00 | 1,411.00 | 2,315.00 |
Motilal Oswal Financial Services Ltd | 8,625.00 | 1,399.00 | 2,337.00 |
Nomura Equity Research | 8,500.00 | 1,398.00 | 2,300.00 |
Average | 8,611.80 | 1,442.80 | 2,344.60 |
IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT
Edited by Saji George Titus
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