SONACOMS Q2 FY26 earnings call.
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Revenue
₹1,138 Cr
verified against source
Revenue YoY
24%
reported change
EBITDA
₹289 Cr
latest reported figure
Source
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record provenance
Actual signal trajectory
Where this quarter sits.
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What the record says.
Sona Comstar delivered its best-ever quarterly performance in Q2 FY26 with INR 1,144 crore revenue (+24% YoY), INR 289 crore EBITDA, and INR 173 crore PAT, despite significant headwinds. The company faced a 17% decline in BEV revenue driven by one major customer's model-specific demand drop, and continues navigating China's rare earth magnet export restrictions by developing rare earth-free ferrite motors. EBITDA margin of 25.3% represents a 230bps contraction YoY due to product mix and railway business dilution post-acquisition. The order book stands at INR 236 billion with 70% EV content, though management prudently removed INR 36 billion of low-visibility programs. New wins include INR 8.2 billion suspension nominations and INR 2.6 billion Mexico differential assembly order. Geographically, India (45%) overtook North America (30%) as largest market for the first time since listing. Management targets 24-26% EBITDA margin going forward. Key risk: further BEV revenue erosion from customer concentration and rare earth supply chain volatility.
Colored figures show movement against the previous available record.
Guidance to track
- Post railway acquisition, management guides for 24-26% range versus the pre-acquisition 25-27% range, reflecting dilution from the 20%-margin railway business.
- First program secured for differential case assemblies (INR 2.6B) with production start in Q2 FY2028. Plant positioned as offensive growth engine, not defensive tariff hedge.
- ROE and ROCE declined to 13% and 16% respectively due to September 2024 equity raise fully reflected in denominators. Management expects gradual improvement as cash is deployed into growth initiatives.
- New products in brakes, couplers, and suspension under development with 12-month testing cycles before commercialization. Clear pipeline for next 3-5 years driving medium-term growth.
Risks flagged
- One major global customer's demand challenges on a specific model led to 17% BEV revenue decline in Q2. This is not reflective of industry trends and management has corrected the order book accordingly.
- China's heavy rare earth magnet export restrictions since April 8 impacted Q1 EV traction motor production. Management pivoted to ferrite-based motors but further restrictions (including light rare earths) could disrupt operations.
- Analyst questioned whether future order quantity deductions may occur given the INR 36B cleanup. Management acknowledged similar corrections could happen again if exceptional events occur, though deemed unlikely.
- Analyst raised supply chain risks from Nexperia chip shortages (affecting LCV production) and Novelis aluminum plant fire impacting Ford F-Series trucks. Management assessed both as low risk given customer exposure profile but acknowledged monitoring.
Key quotes
- Three of our direct competitors in Europe have filed for insolvency proceedings. This has resulted in an unprecedented increase in inquiries from European customers to us. Hopefully, in the next few quarters to come, we can win significant new orders from Europe.
- If you see a duck in a pond, it seems as if it's gliding effortlessly. Same margins all the time, but it's paddling furiously under the surface. There is a lot of work that goes into it. Every single process there is some room to improve.
- Post this acquisition, I'll say between 24% to 26% is what we try to do.
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