Summary
Sona BLW Precision Forgings Ltd. - Q3 FY26 Earnings Call Summary Friday, January 23, 2026 4:00 PM IST
Event Participants
Executives 8 Amit Mishra, Ankit Agrawal, Praveen Rao, Pratik Sachan, Rohit Nanda, Sat Mohan Gupta, Vikram Verma, Vivek Vikram Singh
Analysts 4 Amyn Pirani, Gunjan Prithyani, Kapil Singh, Nitin Arora, Rishi Vora
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue | ₹1,209 crores | +39% YoY; Highest quarterly revenue ever, driven by sharp recovery and India growth. |
| EBITDA | ₹305 crores | +30% YoY; First time crossing ₹300cr milestone; absolute growth offset by mix changes. |
| EBITDA Margin | 25.2% | -180 bps YoY; Impacted by product mix shifts toward India and assembly-heavy segments. |
| Adjusted PAT | ₹181 crores | +20% YoY; Excludes ₹30cr one-time impact from new labor code provisions. |
| BEV Revenue | ₹320 crores | -3% YoY, but +21% QoQ; Represents 38% of total automotive revenue. |
| BEV Revenue Share | 38% | Increased from 32% in Q2 FY26; second-highest level achieved to date. |
| Net Order Book | ₹23,500 crores | Broadly stable QoQ; 71% of order book consists of EV programs. |
| ROCE / ROE | Not Disclosed | ROE noted to have improved slightly as railway capital deployment yields returns. |
Geographic & Segment Commentary
- India: Contribution increased to 55% of revenue in Q3 (up from 33% last year), driven by traction motors, commercial vehicles, and railway systems. Management emphasized that India-centric growth has not diluted consolidated margins below the 25% threshold.
- North America: Revenue share nearly halved compared to FY25 due to a 45% QoQ decline in the regional EV market and 36% YoY volume drop. Management expects this to swing back once trade deals or new programs ramp up.
- Railway Business: Fastest growing segment alongside EV traction motors; diversification into non-automotive segments now accounts for 31% of total revenue for 9M FY26.
- Off-Highway & Agriculture: Strong performance across all geographies; tractors noted as a bright spot with new product launches like hydraulic motor controllers.
Company-Specific & Strategic Commentary
- Supply Chain Pivot: Successfully shifted E-2W/3W motor designs from heavy rare earth magnets to light rare earth (LRE) magnets due to Chinese export restrictions.
- Strategic Acquisitions: Defended the Railway business acquisition as EPS accretive; management signaled intent to add another Business Unit (BU) given the ₹1,100 crore cash balance.
- Product Expansion: Launched Air Springs for railway rolling stock (quadrupling the suspension addressable market) and Hydraulic Motor Controllers for farm equipment.
- ADAS Roadmap: Foray into in-cabin and 180-degree exterior radar solutions via NOVELIC; targeting the Indian M&HCV mandate effective CY27.
- RFQ Pipeline: Current pipeline is 3x larger YoY; 1/3rd of new inquiries originating from Europe as competitors face financial distress.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| EBITDA Margin | 24% - 26% Range | Long-term range adjusted from 25-27% post-railway acquisition due to lower segment margins. |
| Revenue Growth | Sustainable double-digit | Driven by 31 unproduced EV programs and 400-500 million Euro supply chain redistribution in Europe. |
| Labor Code Impact | ~₹4 crores per annum | Estimated recurring impact on employee costs from Q4 FY26 onwards (approx. ₹1cr/quarter). |
| EV Market Share | Continued Gains | Expected to increase in differential gears (Ex-China) and traction motors as 4W programs approach. |
Risks & Constraints
| Risk | Context |
|---|---|
| Geopolitical/Tariffs | US tariff uncertainties persist; while USMCA relief was extended, potential for broader tariffs remains a monitorable. |
| Supply Chain | China’s restrictions on heavy rare earth magnets force reliance on alternative LRE designs which may have different performance/thermal profiles. |
| EV Adoption Volatility | Sharp 45% QoQ decline in North American EV volumes illustrates the risk of high order book concentration (71%) in the BEV segment. |
| Inflationary Pressure | Rising aluminum and copper prices act as a mathematical drag on EBITDA margins despite contractual pass-throughs. |
Q&A Highlights
Supply Chain Redistribution
- Question: What is driving the 3x surge in RFQs? (Gunjan Prithyani)
- Answer: Financial distress of European competitors is forcing OEMs to resource hundreds of millions of Euros in business. India and China are the primary recipients, with North American OEMs favoring India due to geopolitics (Vivek Singh).
Driveline & EV Recovery
- Question: Why did differential gear revenue grow sharply QoQ? (Analyst)
- Answer: Recovery in volumes from the oldest EV customer and decent growth in European Plug-in Hybrid (PHEV) programs (Vivek Singh).
Traction Motor Strategy
- Question: Is there a change in focusing on 4W traction motors? (Rishi Vora)
- Answer: The intent was always to move from 2W to 3W and finally 4W. The company is now working on 4W/CV solutions as capabilities have matured (Vivek Singh).
Commodity Pass-throughs
- Question: How do rising metal prices affect the P&L? (Rishi Vora)
- Answer: Copper and aluminum are pass-throughs in the motor business; steel is partial. While absolute EBITDA is protected, higher commodity prices mathematically depress the EBITDA margin % (Rohit Nanda).
Key Takeaway
Sona Comstar delivered its strongest financial performance to date in Q3 FY26, surpassing ₹1,200 crore in revenue and ₹300 crore in EBITDA. The quarter was characterized by a successful strategic pivot where the India revenue mix reached 55% without diluting consolidated EBITDA margins, which remained resilient at 25.2%. Despite a significant 45% sequential downturn in the North American EV market, the company’s BEV revenue grew 21% QoQ, supported by diversification into 64 programs across 33 customers. Looking ahead, management cited a record RFQ pipeline—3x larger than last year—driven by the bankruptcy of European competitors and the redistribution of global supply chains. While the one-time labor code impact of ₹30 crore temporarily affected PAT, the company remains focused on its “4 Ts” (Tractors, Trucks, Trains, and Traction motors) strategy and is evaluating further acquisitions to utilize its ₹1,100 crore cash reserve. Management expects to maintain a 24-26% EBITDA margin corridor while significantly expanding its ADAS and railway suspension addressable markets.
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