Sona BLW Precision Forgings Limited — Q4 FY26 earnings call

Yeah, Aditya, I mean, for Novelic India, we have set up the entity in India and we have started the launch process for one of the customers. The SOP is going to be end of this year. the lines are already set up, because it's a sensor assembly unit. So we have an SMT line in-house and we'll be using that SMT line. ... As you know, we don't use the phrase kit value because to be honest, I don't understand it. I don't understand what it is there. I mean, we supply a sensor, that is the part, second, giving away pricing information is a competitive disadvantage.

Analyst sought clarity on Novelic's operational ramp-up and potential revenue contribution, but management was evasive on 'kit value' and specific financial impact, citing competitive disadvantage.

Asked by Aditya Jhawar

The only way to grow will be for now, with the customer. So if you do know we supply to one large, Chinese EV customer. So we are in the parts that obviously they sell domestically, but also the ones they export. What is a constraint right now is that unless they move production entirely to either Europe or North America, they will continue to rely on the Chinese supply chain and that is much harder to get into.

Analyst questioned strategy for Chinese OEMs gaining market share. Management indicated current difficulty due to supply chain reliance on China, but potential if production shifts to Europe/US.

Asked by Amyn Pirani

Section 232, which covers a large part of what we export, continues to remain the same. ... The remainder has obviously become easier, and the tariffs have become lower because the country's tariffs are kind of gone. But that again, if my answer, I mean, is the same I gave in Q1 of last year, which is tariffs are paid by importers and not by exporters.

Analyst inquired about the ongoing tariff situation. Management clarified that Section 232 remains unchanged and tariffs are borne by importers, not exporters, suggesting limited direct impact on Sona Comstar.

Asked by Amyn Pirani

So Jay, one fundamental, I would say, input is this that write-downs, which are balance sheet write-downs of prior investments, have really no bearing on suppliers. Because if you have invested something in R&D or Capex, and now you're taking a write-off, how will that impact the number of parts you have bought from us or not? ... So as long as overall electrification continues to progress, that decision will bear fruit. And that is why one fungibility of Capex, second, diversification of customer and program base. These are the two things one can do as a supplier.

Analyst questioned the impact of OEM EV investment write-downs on suppliers and Sona's capital allocation strategy. Management asserted that OEM write-downs don't affect suppliers and highlighted diversification and fungible capex as mitigation strategies.

Asked by Jay Kale

Sure, but Gunjan, it's not 80 bps for a commodity. 80 bps is a commodity and product mix. And as you know, the traction motor has been the highest growth driver where the margins are lower. So my bet, I don't have a breakup. Rohit can answer better, but majority of the 80 bps would be product mix-related, not commodity-related. ... So, Gunjan, this 80 bps is actually almost half for the mix and half for the commodity prices, and, you're right, most of this would be, for the material price, and, that is a pass-through with a lag, so it is largely because of the lag effect.

Analyst sought clarification on the 80 bps margin impact. Management clarified it was split between product mix (lower margin traction motors) and commodity prices, with the latter being a lag effect that is expected to continue if prices trend up.

Asked by Gunjan Prithyani

Short answer, no, because most of these orders are already in geographies where there are little to no subsidies. US, Europe, India also, I think subsidies are almost on their way out almost. So, Yeah, not, not really, is the answer.

Analyst questioned if declining BYD sales due to subsidy changes pose a structural risk to Sona's EV order book. Management stated no, as Sona's orders are largely from geographies with minimal subsidies, reducing exposure to such policy changes.

Asked by Kapil Singh

Nothing that has reached a stage which is worth sharing or reportable. We are always evaluating M&A opportunities at any given time. Over the last 3 years, we would have evaluated over 100 opportunities and frankly acted on one. So that process is always going on. Of course, having cash means that yes, we are always looking very, very aggressively with focus or opportunities that could add to us.

Analyst asked about M&A plans. Management confirmed continuous evaluation of opportunities but no reportable deals currently, emphasizing a disciplined approach to capital deployment.

Asked by Kapil Singh