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Informist, Thursday, Oct. 23, 2025

By Ashutosh Pati

MUMBAI – The consolidation of its recently acquired railway business is likely to be the saving grace for Sona BLW Precision Forgings Ltd.'s performance in the September quarter, cushioning the impact of underlying weakness in the automotive market and uncertainties surrounding US tariffs, analysts said. The company completed the INR 16-billion acquisition of Escorts Kubota Ltd.'s railway equipment division in the June quarter.

The auto parts maker is expected to post a consolidated net profit of INR 1.56 billion for the September quarter, up over 8% on year and around 25% from the previous quarter, according to the average of estimates from seven brokerage firms. JM Financial Institutional Securities Pvt. Ltd. has the highest estimate for net profit at INR 1.66 billion and Motilal Oswal Financial Services Ltd. has the lowest estimate of INR 1.37 billion.

Sona BLW is likely to have earned revenues of INR 10.43 billion in the September quarter, according to the average of estimates. The company's revenue is seen rising nearly 13% on year and around 23% sequentially. Estimates for the company's revenue range from INR 8.88 billion by brokerage firm Motilal Oswal to INR 10.86 billion by ICICI Securities Ltd.

However, most brokerages expect the company's revenue, excluding the railway business, to decline by high single digit or low double digit due to the weak performance of electric vehicles globally. ICICI Securities expects the company's revenue, excluding that from the railways unit, to decline on weak demand from its electric vehicle clients in the US and subdued underlying demand for exports of starter motors due to tariffs.

Kotak Securities expects the company's revenue to fall on weak sales of differential assembly units owing to muted global sales of electric vehicles and lower production from US original equipment manufacturers due to tariffs. Another reason for the decline in revenue is the subdued performance of the starter motor business and differential gear business due to weakness in the underlying automotive market, it said. Motilal Oswal expects the company's revenue from its core business to slide 4% on year, largely "due to the slowdown in the US market".

Meanwhile, Nomura Equity Research expects the company's revenue to pick up in the second half of the year due to the ramp-up of two-wheeler and three-wheeler electric vehicles segment in India. "The company also has the potential to gain market share over the next one year from weaker EU (European Union) competitors which are under stress," the brokerage said.

Sona BLW is an auto-parts manufacturer, with products ranging from hub wheel motors, drive motors, and integrated drive motor and controllers, for electric two- and three-wheelers. It also makes starter motors, traction motors, differential assemblies, intermediate gears and more for passenger and commercial vehicles.

The company is expected to report earnings before interest, tax, depreciation, and amortisation of INR 2.50 billion for the September quarter, down nearly 2% on year but up around 24% sequentially, according to the average of estimates from seven brokerages. The EBITDA estimates range from a low of INR 2.19 billion by Motilal Oswal to a high of INR 2.61 billion by ICICI Securities.

The company's EBITDA margin is expected to decline because of an unfavourable product mix and negative operating leverage in core business, according to analysts. Kotak Securities expects the company's EBITDA margin to decline by 380 basis points on year to 23.8% during the September quarter while YES Securities (India) Ltd. expects EBITDA margin to fall by 310 bps on year.

The company will detail its results for the September quarter Monday. Of the eight brokerage reports on the company available with Informist, six have a 'buy' or equivalent rating on the stock, with an average target price of INR 560. Motilal Oswal has a 'neutral' rating while Kotak Securities Ltd. has a 'reduce' rating.

At 1302 IST, shares of Sona BLW were 4.1% higher at INR 480.85 on the National Stock Exchange. Since reporting its June quarter earnings on Aug. 4, shares of the company have risen over 8%.

For the June quarter, the company had posted a consolidated net profit of INR 1.25 billion, down 12% on year, lower than analysts' estimate of INR 1.33 billion. Its revenue had fallen over 4% on year to INR 8.54 billion.

The following are the Jul-Sept earnings estimates for Sona BLW Precision Forgings from seven brokerages in descending order by the estimate of net profit:

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Subhojit Sarkar

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