Sona BLW Precision Forgings Limited — Q3 FY26 earnings call

Call held 23 Jan 2026

Management summary

Sona Comstar delivered its best-ever quarterly performance in Q3 FY26, with record revenue and EBITDA, driven by strong BEV growth and strategic diversification. Despite global volatility and a decline in the North American EV market, the company's robust order pipeline and product innovation, including new railway and farm equipment products, underscore its anti-fragility strategy. Margins remained healthy at 25%, even with commodity price increases and one-time labor code costs.

Highlights

  • Achieved highest ever quarterly revenue of ₹1,209 crores and EBITDA of ₹305 crores, marking the first time crossing these milestones.

  • Q3 FY26 revenue grew 39% YoY, EBITDA grew 30% YoY, and adjusted PAT grew 20% YoY.

  • BEV revenues increased 21% QoQ, with the BEV mix expanding to 38% in Q3 from 32% in Q2, despite a 45% QoQ decline in North America EV volumes.

  • The net order book remained broadly stable at ₹235 billion, with 71% from EV, and the RFQ pipeline is almost 3 times stronger YoY.

  • Successfully diversified revenue mix, with India's share doubling and Eastern markets now accounting for 58% of total revenues (up from 33% last year), while maintaining a 25% EBITDA margin.

Concerns

  • China's restrictions on heavy rare earth magnets persist, though the company has shifted to alternative motor designs.

  • EBITDA margin for Q3 FY26 was 25.2%, a 1.8% decline YoY, mainly due to changes in product mix.

  • A one-time impact of ₹30 crore on PAT was incurred due to newly introduced labor codes (gratuity and leave encashment provisions).

Key financials

  1. Revenue ₹1,209 Cr +39%YoY
  2. EBITDA ₹305 Cr +30%YoY
  3. EBITDA Margin 25.2%
  4. Adjusted PAT ₹181 Cr +20%YoY
  5. BEV Revenue ₹320 Cr -3%YoY
  6. BEV Revenue Share (Automotive) 38%

What they filed

Q1 FY27: revenue up 52.3%, net profit up 46.7% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue922 868 865 854 1,138 +23%1,200 +38%1,258 +45%1,301 +52%
EBITDA252 234 231 206 284 +13%296 +26%296 +28%293 +42%
Net profit144 151 164 122 170 +18%150 −1%187 +14%179 +47%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • India Business
    55% Share of Total Revenue
  • Eastern Markets
    58% Share of Total Revenue
  • Non-Automotive
    31% Share of 9M Revenue

Order book

high confidence

Total value

₹235 Bn

as of 2025-12-31 quantified

Execution

Anywhere between 12 to 18 months for revenue to flow, sometimes longer up to 24-30 months.

Composition

  • EV Portion (product) 71%
  • Europe (geography) 33%

Pipeline

qualified rfp

RFQ pipeline is almost 3 times stronger compared to last year

The order book remained broadly stable sequentially, with new order wins offset by consumption, and the RFQ pipeline is at a historic high, indicating strong future demand.

Source: Prepared remarks

Capital allocation

medium confidence
  • Liquidity Cash ₹1,000 Cr The company has 1,000 to 1,100 crores of cash, indicating a strong balance sheet for future capital deployment.
    And, I mean, going forward, very, very high probability that we will add another BU. We are keeping our powder dry and with a strong balance sheet and I don't know, 1,000 or 1,100 crores of cash sitting with us.

Guidance & targets

Profitability

  • EBITDA Margin Profitability · Long-term · High confidence 25-27%
    At that time, I used to say our range of EBITDA will always be between 25 to 27.

    — Vivek Vikram Singh

Operating Costs

  • Impact of New Labor Codes Operating Costs · Annual · High confidence ₹4 crores
    Yeah, so, see, our current estimate is it should be around 4 crores a year.

    — Rohit Nanda

  • Impact of New Labor Codes Operating Costs · Quarterly · High confidence ₹1 crore
    Yeah, so, Ok, I mean, if it has to be that specific, 4 crores per annum will mean 1 crore a quarter.

    — Rohit Nanda

Product Growth

  • Traction Motors and Controllers Growth Product Growth · Next 5 years · High confidence Highest growth segment
    for the next 5 years also, I would expect traction motors and controllers to be our highest growth segment, by far, I think.

    — Vivek Vikram Singh

Product Development

  • Partnerships (Enedym, C-Motive, Equipmake) Update Product Development · 6-7 months · Medium confidence Meaningful update
    Hopefully, in 6-7 months time, we will have a meaningful update for you.

    — Vivek Vikram Singh

ADAS

  • OEM Program Support ADAS · FY27 onwards · High confidence All OEM programs
    So that is something which is exciting because we will be launching production with our first product pretty soon, which means we'll be able to have the opportunity to support all the OEM programs anytime FY27 onwards.

    — Praveen Rao

What to watch in Q4 FY26

Order Book Conversion to Revenue

Next quarter
Current 12-18 months (typical)
Target Faster conversion for 'running change' programs

Why it matters

To assess the velocity at which the strong order book translates into actual revenue, especially for new programs and midstream switches.

anywhere between 12 to 18 months is what it takes for revenue to flow and sometimes even longer, it can even go up to 24 to 30 months. Depends on how early that OEM has moved. What we're talking about are also special situations in which it is what is called a running change, that you have a supplier and you're switching midstream. Those typically are shorter time cycles.

Risks & concerns

  • China's restrictions on heavy rare earth magnets

    medium

    China's restrictions on heavy rare earth magnets persist, but the company has successfully shifted to alternative motor designs using light rare earth magnets.

    Management acknowledged

  • Global volatility and potential demand disruption

    medium

    Despite global volatility, the company's strong RFQ pipeline and diversified model indicate resilience and growth opportunities.

    Management acknowledged

  • Decline in North America EV market volumes

    medium

    North America EV volumes declined 45% QoQ and 36% YoY, but the company's BEV revenues still grew 21% QoQ due to diversification.

    Management acknowledged

  • Impact of new labor codes on profitability

    low

    A one-time impact of ₹30 crore was incurred in Q3 FY26 due to new labor codes, but the recurring annual impact is estimated at ₹4 crores.

    Management acknowledged

Q&A highlights

8 direct
Assessment of Railway Business Acquisition Direct
I mean, if you look at it fundamentally, the two biggest roles of any management team has and across businesses, right, is generating cash and then deploying that cash. If the cash deployed returns higher money than simply holding it or returning it to shareholders, then the management has done their job well.

Management clarified the strategic rationale for the railway business acquisition, emphasizing capital allocation for EPS accretion and cash generation rather than just standalone segment performance.

Asked by Kapil Singh

ADAS Opportunity and Strategy Direct
So this is something which is exciting because we will be launching production with our first product pretty soon, which means we'll be able to have the opportunity to support all the OEM programs anytime FY27 onwards.

Management detailed their ADAS strategy, focusing on radar modules, in-cabin and exterior solutions, and their readiness to support OEM programs from FY27, highlighting cost advantages and local production.

Asked by Kapil Singh

Traction Motor Growth and Market Share Direct
But market share calculation within, is harder to give you as a percentage. That's why basically, at the end of year, we'll just see how many electric vehicles are produced.

Management attributed strong traction motor growth to agility in shifting to rare earth-free magnets and expanding wallet share, noting the significant opportunity in 3-wheelers and expecting it to be the highest growth segment.

Asked by Gunjan Prithyani

Supply Chain Diversification and European Opportunity Direct
So this is basically redrawing of supply chain maps itself. It is one of the bigger moves. I mean, you know, remember there was a time in 22, 23, you used to ask me about China plus one and all. At that time, even, and I think it'll be in one of our transcripts that I said this is not, it is not as real as people claim it to be, because there wasn't really an imperative to do so. Now there is a financial imperative to do so, so there is a hardcore urgency behind this.

Management explained the 'redrawing of supply chain maps' due to European competitors' financial difficulties, creating a significant opportunity for Indian and Chinese suppliers, with a 'hardcore urgency' driving this shift.

Asked by Gunjan Prithyani

Profitability of New Orders and CV Cycle Outlook Direct
So we will, of course, try to be prudent about it and choose the opportunities that are more commercial vehicles, more bigger vehicles, SUVs, pickup trucks where torque is high, and value addition naturally is high and gross margin is high, and hence our EBITDA margins are high.

Management reiterated its commitment to maintaining EBITDA margins by selectively pursuing higher-margin opportunities in commercial vehicles and larger segments, while also noting positive trends in the 4 T's (trucks, tractors, train brakes, traction motors).

Asked by Nitin Arora

Comparison of Rare Earth Free Motors Direct
Between heavy rare earth and light rare earth, the difference is not major. It impacts two things. One is the performance, which is in terms of the efficiency of the machine and the thermal handling of the system or the machine, you can say.

Management provided a technical comparison of heavy, light, and ferrite rare earth magnets, explaining the trade-offs in performance, efficiency, and weight, and how they manage to meet customer requirements with LRE.

Asked by Kapil Singh

Impact of EV Policy Changes and Macro Environment Direct
The policy changes that were to happen have happened. I mean, like when people say when the worst has happened, you can actually breathe a sigh of relief because you're already through it. So, all EV subsidies or credits that were being given in the US have been scrapped already.

Management expressed confidence that the worst of EV policy changes (e.g., US subsidy removal) is behind, and with declining battery prices, EV adoption is becoming economically viable, creating a strong tailwind for Europe and India.

Asked by Kapil Singh

Order Book Conversion Timeline Direct
anywhere between 12 to 18 months is what it takes for revenue to flow and sometimes even longer, it can even go up to 24 to 30 months. Depends on how early that OEM has moved.

Management clarified the typical timeline for order book conversion to revenue, noting that 'running change' situations (midstream supplier switches) can result in shorter cycles.

Asked by Kapil Singh

2 min read 6 chapters

Detailed narrative

Q3 FY26 Financial Performance Highlights

Sona Comstar achieved its best-ever quarterly performance in Q3 FY26, with revenue reaching ₹1,209 crores, a 39% year-on-year growth. EBITDA stood at ₹305 crores, increasing by 30% YoY, while adjusted PAT grew 20% YoY to ₹181 crores. The EBITDA margin for the quarter was 25.2%, a slight decrease of 1.8% YoY primarily due to product mix changes. For the nine-month period, revenue grew 19% YoY to ₹3,203 crores, with EBITDA and PAT increasing by 8% and 9% respectively, maintaining robust margins around 25%.

Strategic Pivots and Diversification Success

The company demonstrated significant strategic agility and diversification. North America, previously the largest market in FY25, saw its contribution nearly halve, while India's revenue mix doubled. Despite these shifts, the company maintained its growth and margins. Eastern markets now contribute 58% of total revenues, up from 33% last year, and non-automotive revenues increased to 31% in the first nine months of FY26 from 9% in FY25, showcasing successful market and product diversification.

EV Business Resilience and Growth

The EV business showed strong resilience and growth, with BEV revenues increasing 21% quarter-on-quarter and the BEV mix expanding to 38% in Q3 from 32% in Q2. This performance is particularly noteworthy given a sharp 45% QoQ and 36% YoY decline in North America EV market volumes. The company's diversified EV model, with 64 programs across 33 customers (33 in production), helped maintain BEV revenues, which were only 3% down YoY despite the challenging market conditions.

Robust Order Book and Pipeline

Sona Comstar's net order book stands at ₹235 billion as of Q3 FY26, with a significant 71% attributed to EV programs. The RFQ (Request for Quote) pipeline is at its strongest in the company's history, almost three times larger than the previous year, indicating high future demand. Approximately one-third of this increased pipeline originates from European customers, driven by competitors' financial difficulties, presenting a substantial opportunity for market share gains.

New Product Development and ADAS Initiatives

The company continues to strengthen its R&D roadmap with new product introductions. This quarter saw the addition of Air Springs for railway coaches, which will quadruple the addressable market in suspension systems, and a Hydraulic Motor Controller for farm equipment. In ADAS, Sona Comstar is leveraging its NOVELIC vertical for millimeter-wave radar solutions, with a Chennai production facility. They are developing in-cabin (DDAWS) and exterior (180-degree field of view) radar systems, aiming to support OEM programs from FY27 onwards.

Commodity Costs and Labor Code Impact

Management confirmed that commodity costs for steel (in some contracts), copper, and aluminum are largely pass-through for driveline and motor businesses, which helps mitigate margin pressure. However, pass-through mechanisms can numerically depress reported margins. The company also incurred a one-time impact of ₹30 crore on PAT in Q3 FY26 due to new labor codes, with an estimated recurring annual impact of ₹4 crores (₹1 crore per quarter).

This is an AI-generated summary of a publicly available earnings call transcript.
View original transcript

More Automobile and Auto Components earnings calls