How has been the historical performance of Automotive Axles?

Revenue and Profitability Trends

Over the seven-year period ending March 2025, Automotive Axles’ net sales exhibited notable fluctuations, reflecting broader industry cycles and economic conditions. The company’s revenue peaked at over ₹2,300 crores in fiscal 2023 before moderating to approximately ₹2,078 crores in 2025. This slight decline from the peak is set against a backdrop of a significant recovery from the pandemic-impacted years 2020 and 2021, when sales had dipped below ₹1,000 crores.

Operating profit margins, excluding other income, have remained relatively stable, hovering around 10.5% to 11% in recent years, a slight contraction from the near 12% margin seen in 2019. This consistency in operating efficiency underscores the company’s ability to manage costs amid raw material price volatility and other operational challenges.

Profit after tax (PAT) margins have shown a commendable improvement, rising from a low of 2.5% in 2021 to approximately 7.5% in 2025. Correspondingly, earnings per share (EPS) have surged from ₹15 in 2021 to nearly ₹103 in 2025, reflecting both enhanced profitability and stable equity capital.

Cost Structure and Expense Management

Raw material costs have consistently represented the largest expense component, accounting for roughly 70% of total operating income in recent years. Despite fluctuations in raw material prices, the company has maintained a disciplined approach to inventory and stock management, as evidenced by the variable but generally controlled changes in stock levels.

Employee costs have risen steadily from ₹88 crores in 2021 to nearly ₹139 crores in 2025, reflecting both workforce expansion and inflationary pressures. Other expenses have also increased but remain proportionate to the scale of operations, supporting the company’s operational needs without eroding margins significantly.

Balance Sheet Strength and Capital Structure

Automotive Axles’ balance sheet has strengthened considerably over the years. Shareholders’ funds have grown from ₹554 crores in 2021 to nearly ₹982 crores in 2025, driven by accumulated reserves and retained earnings. The company has successfully reduced its long-term borrowings to zero by 2025, signalling a robust deleveraging trend and improved financial stability.

Total liabilities have increased moderately, reflecting growth in trade payables and current liabilities, which is typical for a company scaling its operations. The net block of fixed assets has seen a gradual decline from ₹238 crores in 2022 to ₹186 crores in 2025, possibly indicating asset optimisation or depreciation outpacing capital expenditure.

Current assets have expanded significantly, with total current assets rising to over ₹1,100 crores in 2025. This includes a marked increase in sundry debtors and short-term loans and advances, which may warrant close monitoring for working capital efficiency.

Cash Flow and Liquidity Position

Cash flow from operating activities has shown variability, peaking at ₹260 crores in 2024 before moderating to ₹128 crores in 2025. The company has consistently invested in capital expenditure, with cash outflows from investing activities remaining negative but controlled. Financing activities have seen net outflows, consistent with the reduction in borrowings and dividend payments.

Despite these outflows, the closing cash and cash equivalents have declined to ₹8 crores in 2025 from ₹32 crores the previous year, suggesting a tighter liquidity position that may require strategic attention going forward.

Summary of Historical Performance

In summary, Automotive Axles has navigated a challenging industry environment with resilience, demonstrating steady revenue growth post-pandemic, stable operating margins, and improved profitability. The company’s balance sheet has strengthened through debt reduction and reserve accumulation, while cash flow management remains an area to watch given recent liquidity tightening.

Investors analysing Automotive Axles should consider its consistent earnings growth and improving margins alongside the evolving working capital dynamics and capital expenditure commitments. The company’s ability to sustain these trends will be critical in maintaining its competitive position within the auto components sector.

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