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Operationally in-line quarter; miss on PAT due to lower other income

* Standalone revenue during the quarter grew ~4% YoY to 3.5b (in line). During the quarter, revenue from the CV segment (both domestic and exports), farm equipment, and off-highway exports declined. However, this was partially offset by better demand in industrials and growth in the PV segment.

* Revenue growth during the quarter was entirely driven by ASP growth, while volumes remained flat YoY.

* Gross margin expanded 250bp (-90bp QoQ) to 58%, mainly due to a better mix (higher machining mix at 88% in 9MFY25, up from 84% in 9MFY24).

* This led to a margin expansion of 80bp YoY to 28.6% (est. 29.2%).

* EBITDA grew ~7% YoY to INR1.02b (in line).

* Lower other income led to a miss on adj. PAT at INR645m (up 11% YoY, est. INR683m).

* The company’s 9MFY25 revenue/EBITDA/adj. PAT grew 4%/5%/10% YoY.

* The company has announced an investment of INR6.5b towards setting up advanced forging capabilities in the heavyweight components segment (weighing 250-3000kg).

* This will be used for non-automotive industrial segments. It will be one of the largest facilities in Asia and the second largest globally.

* Asset turnover is expected to range between 1.0 and 1.2x.

* It has the potential to generate an additional annual revenue of INR6-8b.

* Valuation view: The stock trades at 27x/22x FY26E/FY27E EPS.

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