Sona BLW Precision Forgings Q2 FY26 earnings call

Sona Comstar reported its highest-ever quarterly revenue of ₹1,144 crores, a 24% YoY increase. While EBITDA margins returned to a healthy 25.3%, the company faced a 17% decline in BEV revenue due to a single model's poor performance at a major customer. This was offset by strong growth in the railway and off-highway segments, showcasing the benefits of recent diversification efforts.

In a move toward greater transparency, management removed ₹36 billion worth of programs from its order book citing low visibility. Despite this ₹36 billion 'consumption' (which includes removals), the net order book remains robust at ₹236 billion, with 70% still tied to EV programs. This pruning ensures that the reported backlog reflects realistic future production volumes.

Following China's ban on heavy rare-earth magnets, Sona Comstar successfully developed and validated rare-earth-free Ferrite Assisted Synchronous Reluctance Motors. These motors are targeted at electric 3-wheelers and LCVs. Management noted that while these motors are slightly heavier, they offer significant cost advantages and eliminate supply chain dependency on China.

The newly acquired railway business is already contributing significantly, with an order book of ₹13 billion expected to be executed within the next 12 months. Management is applying automotive 'Total Quality Management' (TQM) rigors to the railway plants to improve margins and cash conversion cycles. Revenue from non-automotive sectors has jumped to 29% of the total mix.

The company has put its China JV in abeyance due to geopolitical factors, choosing instead to focus on its new Mexico plant. The Mexico facility secured its first order of ₹2.6 billion for differential assemblies for a US OEM, validating the strategy of localizing production near North American customers to mitigate tariff risks.