Automotive Axles Limited , a leading manufacturer of axles and brakes for commercial vehicles, reported a flat revenue of INR 498.00 crores for the first quarter, remaining stable compared to the same period last year. Despite the challenging market conditions, the company managed to improve its profitability, with EBITDA margin expanding from 11.20% to 11.70% and PAT margin increasing from 6.90% to 7.30% year-over-year.

New Business Model Implementation

The company has implemented a new business model, consolidating sales at the Automotive Axles level instead of routing through Meritor HVS India Limited. This change is expected to bring marginal improvements in margins, although the full impact will be more visible in the coming quarters.

Market Outlook

The overall commercial vehicle market is anticipated to be flat or down by 4% this year. Kishan Kumar, General Manager at Meritor HVS (India) Limited, noted that Q2 is expected to be softer due to inventory buildup and monsoon impact. However, the company remains optimistic about recovery in Q3 and Q4.

Product Mix and Market Trends

Automotive Axles is witnessing a shift in product mix, with higher demand for heavy-duty engines in the truck segment and increased volumes in the bus segment. The company has already launched products for the 4x2 tractor trailer and tipper segments, and is well-positioned to cater to the growing bus market.

Capex and Expansion Plans

The company's board has approved a capex of INR 120.00 crores for capacity enhancement and automation. This investment is part of Automotive Axles' strategy to double its revenue by FY30. The capex will be implemented in two phases, with completion expected by the end of FY26 and Q3 FY27, respectively.

New Product Development

Automotive Axles is currently developing new products, including 13.5m and 15m bus axles, which are in the prototype stage. The company is also fine-tuning product specifications to meet changing customer applications and demands, with prototypes expected to be ready by the end of the current fiscal year.

Export Challenges

While the company faces some challenges in the export market due to ongoing tariff discussions and low demand in North America, the management stated that their export exposure to North America is relatively small and not a significant concern at present.

Financial Performance

Nagaraja Gargeshwari, President and Whole-Time Director of Automotive Axles, commented on the results, stating, "Despite the soft market, we are able to put up a very strong performance and then we continue to improve our EBITDA and cash flow for the quarter."

The management remains cautiously optimistic about the future, expecting the market to recover in the second half of the fiscal year. They have emphasized their commitment to improving profitability through cost reduction initiatives, automation, and new product development.

Automotive Axles Ltd. , a leading manufacturer in the automotive components sector, has released its financial results for the fourth quarter, showcasing a mixed performance with improved profitability despite a slight decrease in revenue.

Financial Performance Highlights

Automotive Axles reported a marginal decline in revenue, which stood at ₹5.60 billion for the quarter, down from ₹5.72 billion in the same period last year, representing a 2.10% decrease. Despite the revenue dip, the company managed to improve its bottom line.

Profitability and Margins

The company's EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) saw a slight decrease to ₹626.30 million from ₹637.10 million year-over-year. However, the EBITDA margin showed a minor improvement, increasing to 11.19% from 11.15% in the corresponding quarter of the previous year.

Notably, Automotive Axles' net profit rose to ₹459.30 million, marking a 4.15% increase from ₹441.00 million in the same quarter last year. This improvement in net profit is particularly significant given the challenging revenue environment.

Sequential Performance

The company also demonstrated strong sequential growth in profitability. Compared to the previous quarter, net profit increased from ₹395.80 million to ₹459.30 million, indicating a robust quarter-on-quarter performance.

Dividend Announcement

In a move that may please shareholders, Automotive Axles' board has recommended a final dividend of ₹30.50 per share. This dividend announcement comes as a positive signal, reflecting the company's commitment to returning value to its shareholders despite the slight revenue contraction.

Conclusion

The financial results of Automotive Axles reflect the company's ability to maintain profitability and improve margins in a challenging market environment. While revenue saw a minor setback, the increase in net profit and the attractive dividend payout underscore the company's operational efficiency and shareholder-friendly approach.