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Informist, Saturday, Aug. 2, 2025

By Adhithya Aji

MUMBAI – Sona BLW Precision Forgings Ltd. is expected to report an on-year fall in its net profit and net sales for the June quarter, according to brokerages tracking the company. The automotive technology company's weak performance is due to uncertainties over US tariffs, low demand for electric vehicles in the global market, and the low-margin railway business that the company recently acquired.

The company is expected to post a consolidated net profit of INR 1.33 billion, down 6% on year and down 18.7% on quarter, according to the average of estimates from five brokerages. The highest estimate for net profit is INR 1.53 billion from Yes Securities Ltd. and the lowest estimate is INR 1.19 billion from Nuvama Wealth Management Ltd.

The top line of the company is estimated at INR 8.59 billion, down 3.6% on year and down marginally on quarter. The highest estimate for revenue is INR 8.64 billion from JM Financial Institutional Securities Pvt. Ltd. and the lowest estimate is INR 8.52 billion from Nomura Equity Research.

The net sales will likely fall 3% in the June quarter due to the double digit decline in the company's core business, driven by sustained weakness in the demand for differential assembly, according to Kotak Institutional Equities. The differential assembly is a crucial vehicle part that allows two drive wheels to rotate at different speeds. The differential assembly segment formed accounted for 27% of the company's revenue in 2024-25 (Apr-Mar), according to the annual report of the company. Kotak attributed the muted performance of the differential assembly segment sales to the weak demand for electric vehicles globally and low production by US automakers.

The consolidation of the railway business and strong growth in the traction motor business is expected to partly offset the sales decline in other products, Kotak said. In the June quarter, Sona BLW said it had completed the INR-16-billion purchase of the railway equipment division of Escorts Kubota Ltd. The deal was originally expected to be completed by September 2025.

The company is expected to post earnings before interest, tax, depreciation, and amortisation of INR 2.08 billion according to an average of estimates from five brokerages. The highest estimate for the EBITDA is INR 2.15 billion from Yes Securities India Ltd. and the lowest estimate is INR 2.05 billion from Kotak.

The adverse product mix, negative operating leverage, and consolidation of railway business is expected to contract the EBITDA margin to 23.7%, down 440 bps on year, said Kotak. "Given weak demand, an adverse mix and tariff impact, we expect EBITDA margin to decline 140bp Quarter-on-Quarter to 24% (down 410bp Year-on-Year)," Motilal Oswal said.

The company will announce its June quarter earnings Monday. Investors will keenly watch management commentary on the share of electric vehicles in the company's business and on the uncertainties over US tariffs.

Friday, shares of Sona BLW ended at INR 437.55 on the National Stock Exchange, down 2.7%%. The stock is down 12% since the company announced its March quarter earnings. Of the eight brokerage reports on the company available with Informist, five have a ‘buy' rating with an average target price of INR 590. Two brokerages have a ‘hold' rating and one has a ‘sell' rating on the stock.

Following are the Apr-Jun estimates for Sona BLW Precision Forgings Ltd. in INR million, based on reports from five brokerages in the descending order of net profit:

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Edited by Vandana Hingorani

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