Stock Crash: Shares of Thermal solutions provider fall 11% after Q2 margins narrow

Shares of Subros Ltd. are down over 12% on Tuesday, November 11, in response to its September quarter results that were reported after market hours on Monday. This is the biggest single-day fall for the stock since March 2020.

Subros reported a 11.8% growth in its net profit for the quarter to ₹40.7 crore from ₹36.4 crore last year. Its revenue increased by 6.2% from the year-ago quarter to ₹879.8 crore.

Operational performance during the quarter was weak for Subros with Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) for the quarter declined by 10.1% year-on-year to ₹68.4 crore from ₹76.1 crore, while EBITDA margin narrowed by 150 basis points to 7.7% from 9.2% last year. Higher raw material and employee costs impacted the company's operating performance.

For the first half of the current financial year, Subros' revenue increased by 7% due to increase in volumes and production commencing of new businesses that the company won.

Subros provides thermal solutions products for cars, buses, trucks, tractors, reefers, railways and room AC businesses. The company in an investor presentation stated that its growth is aligned to industry growth in all of its business segment, and that it is expanding its CV business towards buses, trucks and rail.

Shares of Subros are trading 11.7% lower on Tuesday at ₹892.3. Despite today's fall, the stock is still up 40% on a year-to-date basis.