Sona BLW Precision Forgings Limited — Q4 FY25 earnings call

Call held 30 Apr 2025

Management summary

Sona Comstar delivered a resilient FY25 performance, crossing the ₹1,000 crore EBITDA milestone despite a soft Q4 impacted by a customer's model transition. While short-term headwinds like US tariffs and China supply chain disruptions were acknowledged, management remains bullish on long-term EV penetration and new growth frontiers like humanoid robotics. The company's massive ₹24,200 crore order book and strong cash position of ₹2,673 crores provide a solid cushion for future expansion.

Highlights

  • Full-year FY25 revenue grew 12% to ₹3,555 crores, significantly outperforming key markets which grew only 2%.

  • Q4 revenue declined 2% YoY to ₹868 crores due to a major model transition at a large EV customer.

  • Adjusted EBITDA for FY25 crossed the ₹1,000 crore landmark for the first time, reaching ₹1,003 crores (9% growth).

  • Net Profit (PAT) for Q4 reached an all-time high of ₹164 crores, up 10% YoY, aided by higher net interest income.

  • Net order book stands at its highest ever level of ₹24,200 crores ($2.8 billion), with EV contributing 77%.

  • BEV revenue for the full year grew 38% to ₹1,224 crores, now accounting for 36% of total revenue.

  • The company announced entry into the humanoid robot component market, targeting a sector where 50% of BOM is motors and gears.

Key financials

  1. Revenue ₹868 Cr -2%YoY
  2. Adjusted EBITDA Margin 27.6%
  3. Adjusted PAT ₹170 Cr +10%YoY
  4. BEV Revenue Share 34%
  5. Full Year EBITDA ₹1,003 Cr +9%YoY

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

  • Driveline Business
    EV Differential Assemblies category Fastest Growing Product
  • Motor Business
    EV Traction Motors category Fastest Growing Product

Guidance & targets

Margin

  • EBITDA Margin Band Margin · Medium Term · Medium confidence 25-27%
    I mean if it reverts back to the original product mix, yes, we revert back to the original, or earlier defined, you know, margin limits, which we say like 25 to 27% is the range which we give.

    — Rohit Nanda, Group CFO

Capex

  • Mexico Phase 1 Investment Capex · Phase 1 · High confidence <$10 million
    At this moment, we are looking to invest a number which is below $10 million. That's the first stage.

    — Rohit Nanda, Group CFO

Revenue

  • Railway Business Commencement Revenue · Q1 FY26 · High confidence June 1, 2025
    Second, railways, as you know, will start adding from 1st June.

    — Vivek Vikram Singh, MD & Group CEO

Volume

  • EV Programs in Pipeline Volume · FY26-FY27 · Medium confidence 27 programs
    The remaining 27 programs are not yet in production and will start during this or the following years.

    — Vivek Vikram Singh, MD & Group CEO

Risks & concerns

  • US Import Tariffs

    medium

    Management identified 3% of total revenue at risk of loss to local US suppliers if 25% tariffs are implemented.

    Both acknowledged

  • Rare Earth Magnet Supply Chain

    medium

    High dependence on China for magnets; company is evaluating alternate materials like Ferrite and non-China sources.

    Both acknowledged

  • Margin Dilution from Product Mix

    low

    The addition of the railway business (18% EBITDA) to the core business (27% EBITDA) will mathematically lower consolidated margins to the 24-25% range.

    Management acknowledged

Areas of evasion (2)

  • Specific value per vehicle for new products (cited competitive sensitivity).
  • Specific customer names due to confidentiality.

Q&A highlights

3 direct
PLI Accrual Details Direct
So if, let's say if we have to take out the first 3 quarters impact, that would be about 19 crores.

Clarifies that Q4 margins were artificially boosted by a catch-up accrual of PLI income from previous quarters.

Asked by Gunjan Prithyani

US Tariff Impact and Risk Direct
Net net we have 40% of our total revenue to US, in which we have identified 3% where there could be some risk of either revenue loss where they could look to somebody local.

Quantifies the direct exposure to proposed US tariffs, suggesting the risk is manageable at 3% of total revenue.

Asked by Kapil Singh

ICE Business 'Green Shoots' Direct
Strangely, yes... we are now suddenly getting starter motor RFQs which had kind of dried up... because nobody will set up capacities, new capacities for a declining product.

Reveals a counter-intuitive trend where Sona is gaining ICE market share as competitors stop investing in legacy technologies.

Asked by Jay Kale

2 min read 5 chapters

Detailed narrative

Navigating the 'Fog' of US Tariffs

Management addressed the proposed US tariffs head-on, identifying that while 40% of revenue goes to the US, only 3% is at 'medium risk' of being lost to local competition. Vivek Singh argued that tariffs actually widen the pricing gap in Sona's favor against Chinese competitors, who are the primary rivals in their product categories. The company is prepared to set up final assembly in the US if required, noting they already have a plant there and are expanding in Mexico.

Humanoid Robotics: The Next Frontier

Sona Comstar is pivoting its core competencies in motors, gears, and actuators toward the emerging humanoid robot market. Management estimates that over 50% of a humanoid's bill of materials (BOM), which ranges from $35,000 to $50,000, consists of components Sona already specializes in. While currently in the 'exploratory' phase (similar to where EV was in 2016), they are leveraging their driveline and sensor divisions to develop integrated rotary linear actuators.

Order Book Resilience and EV Momentum

The net order book reached a record ₹24,200 crores, bolstered by ₹4,700 crores in new wins during FY25. Electrification remains the primary driver, with EV programs now making up 77% of the total order book. Despite a temporary dip in Q4 revenue due to a customer model transition, BEV revenue for the full year grew 38%, significantly outstripping the 2% growth seen in the underlying global light vehicle markets.

Margin Dynamics and PLI Impact

Q4 adjusted EBITDA margins stood at 27.6%, but this included a ₹19 crore catch-up for PLI income relating to the first three quarters. Management signaled that future margins will be a function of product mix, particularly as the lower-margin (18% EBITDA) railway business is integrated starting June 2025. They expect consolidated margins to settle in the 24-25% range in the near term as this mix shift occurs.

Supply Chain De-risking from China

In response to China's restrictions on rare earth magnets, Sona is actively working with the Indian government and the Chinese Embassy to secure export licenses. Simultaneously, they are developing 'Magnetless' and 'Rare-earth free' motors. While these alternatives can increase motor weight, management believes the current geopolitical climate will drive customers to prioritize supply security over weight restrictions.

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