SONACOMS — earnings call
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Prepared remarks
Moderator · Conference Operator
Ladies and gentlemen, good day and welcome to Sona Comstar Q1FY27 earnings group conference call.
Please note all participants' lines are in the listen only mode as of now.
There will be an opportunity for you to ask questions after the presentation concludes.
Please note that this call is being recorded.
We request that you place your line on mute except when asking questions.
Some of the statements by the management team in today's conference call may be forward looking in nature, and we request you to refer to the disclaimer in the earnings presentation for further details.
The management will also not be taking any specific customer-related questions or confirm or deny any customer name or relationships due to confidentiality reasons.
Please refrain from naming any customer in your questions.
Now I will hand over the floor to Mr. Kapil Singh, Deputy Head of Research India and Lead Auto Analyst at Nomura.
Kapil, please go ahead.
Thank you.
Kapil Singh
Yeah, thanks, Sneha.
Good Evening, everyone.
To take us through the Q1 results, we have the whole management team of Sona Comstar.
We have Mr. Vivek Vikram Singh, MD and Group CEO, Mr. Vikram Verma, Whole Time Director and CEO of Drive Line Business, Mr. Sat Mohan Gupta, CEO of Motor Business, Mr. Praveen Rao, Group CTO, Mr. Rohit Nanda Group CFO, Mr. Amit Mishra, Head Railway Business, Mr. Ankit Agarwal, Head Investor Relations, and, Pratik Sachan, Head, Strategy and M&A.
With this, I'll hand over the call to Vivek for his opening remarks and the presentation.
Vivek Vikram Singh
Thank you, Kapil, and welcome everyone.
Today's call will be a little different from my usual quarterly discussions.
I'd like to first spend some time sharing how we are thinking about the next phase of Sona Comstar's journey.
Those of you who read my recent letter to shareholders know that FY 26 was a year that tested us in many ways.
But while we were dealing with those challenges, something equally important was happening in the background.
We were quietly preparing for our next decade.
Sona Comstar – Q1 FY27 Earnings Call There's a poem by Edwin Markham that I like.
It goes, “when you're the anvil, bear, when you're the hammer, strike.” And we believe that every company goes through both sorts of phases.
There are times when resilience matters the most.
And there are times when a company must forge its own future.
Now, over the last decade, we transformed Sona Comstar from a small automotive components company into a mid-sized global mobility technology company with a diversified product, customer portfolio and leadership positions across many categories.
It's natural for us to then ask ourselves this question.
What does it take to go from a mid-sized company to a truly large company?
And our answer is what we call Sona Comstar 2.0.
This is not a change in direction.
It is a natural evolution of the strategy that has brought us this far.
We began working on the strategy more than 2 years ago.
But we deliberately chose not to talk about it, because we wanted to do something tangible and have something to show before we came to you.
Ambition without substance can easily be mistaken for hubris, and we wanted to come to you not with ideas alone, but with actions.
Yesterday's announcement of the Denso JV is one example.
Our work in Robotics and Physical AI is another one, which is perhaps an even bigger move.
In other words, Sona Comstar 2.0 is not something we are announcing today.
It is the beginning of year 2 of our next decade's journey.
And today, we'd like to share that journey with you.
Slide 5: So let me begin by explaining how we've been thinking about the next decade.
We did some reflection, I put this in our annual report two years ago, that when we look back at our own journey between 2015 and 2025, we noticed something that was both interesting and humbling.
Our revenues increased 10-fold in that period.
Yet, more than 85% of that growth came from just 3 strategic decisions.
We entered new product verticals.
We expanded into global markets, particularly the West.
And we recognized the electrification opportunity early and acted upon it.
That reinforces for us an important lesson that great companies rarely become exceptional because they make hundreds of small good decisions.
They become exceptional because they make a handful of truly transformational decisions and then execute them well.
Our ambition over the next decade is simple.
We want to build another 10x company.
But every decade obviously brings a different set of opportunities.
Our job is not to repeat what worked before.
It is to build on the capabilities that brought us here while creating new growth platforms for the future.
This is why we've broadened our addressable market from automotive to mobility.
Now our first growth engine remains new product verticals.
It has been our biggest driver of growth over the last decade, and we intend to accelerate it through both organic innovation and disciplined acquisitions and partnerships wherever necessary.
Sona Comstar – Q1 FY27 Earnings Call Our second growth engine is what we call a look east strategy.
But let me first explain what it is not.
It is not a shift away from the West.
Europe and North America will remain strategically important markets for us.
Our ambition in those markets is every bit as strong as it has always been.
But what is changing is that over the next decade, we intend to build an equally strong presence in the East, and not through incremental expansion, like having more sales staff or doing more business development calls.
But through carefully chosen strategic moves that strengthen our access to technologies, customers, and markets.
Our railway acquisition was one such move.
Our partnership with DENSO is another, and we expect that we'll continue making similar long-term strategic moves over the next decade.
Our third growth engine is undoubtedly our boldest yet.
Alongside electrification, we're adding another long-term technology theme to the company - Robotics and physical AI.
We believe this has the potential to become a significant long-term growth platform for us as a company.
Slide 6: So now let's begin with the first growth engine, new product verticals.
We believe that one of the biggest differences between great manufacturing companies and really good ones is where management chooses to spend their time.
Most companies spend most of their energy defending the business that they already have.
We have spent hours creating businesses that we did not have.
Ever since our IPO, investors have actually often asked me, what they believe the market still underestimates about Sona Comstar?
You know, people come to you and say, what do people not understand fully?
And in the last 5 years, I don't think I've ever fully answered that question.
So let me try and answer it today.
First, It's our ability to consistently create entirely new products and businesses through our own engineering and R&D.
Today, more than 35% of our revenue comes from products that simply did not exist in our portfolio seven years ago.
19 of those products were conceived, designed, industrialized, and scaled entirely through our own R&D, funded from our own cash flows.
If I annualize our quarter 1, together these new products represented 1,800 crore revenue business generating over 230 crore of annual profit.
If this were a stand-alone company, this would be one of the biggest innovation success stories of India.
That's literally the equivalent of creating a multi-unicorn from scratch in just 7 years.
And this is the power of building new businesses from within.
But organic innovation is only one part of the story.
The second capability, which is probably not understood, is disciplined capital allocation.
Just because we are good engineers, doesn't mean we can't also be thoughtful investors.
Over the last 7 years, we've invested around 2,750 crores across the acquisitions of Comstar, Novelic, and the Railway Business.
And today at the end of Q1, these 3 businesses contribute roughly 40% of our revenue.
And if we assume comparable margins, they contribute 270 crore of net annual profit.
And this is despite the railway Sona Comstar – Q1 FY27 Earnings Call business being in its first year of post-acquisition integration.
All of you are very good at math, so you can do the math of how good or how return accretive these acquisitions have been.
The point is whether we build or we buy, the objective is exactly the same.
To create capabilities that compound over decades, when we believe we can build something better, we build it.
When we believe someone else has already built an exceptional capability, we try and acquire it.
Sona Comstar 2.0 means that we intend to become even more ambitious and double down on both these fronts.
Slide 7: This brings me to the second pillar of our Eastward expansion strategy.
Yesterday, we announced what I believe is the most important strategic partnership in Sona Comstar's history.
A partnership with DENSO.
Not because it's a joint venture, although this is our first joint venture in my time period here.
But because of what it enables us to become.
Over the years, we've built one of India's broadest portfolio of electric powertrain products.
But there was one big gap.
All of you know it.
We did not participate at all in high voltage electric as well as hybrid powertrain systems for passenger and commercial vehicles.
This partnership fills that gap.
More importantly, it completes our entire electrification portfolio.
Today, we have a leadership position in 2 and 3 wheelers in India, and through this partnership, we should hopefully add more customers to the 2 and 3-wheeler JV and extend our leadership position to one of dominance.
Through JV 2, we will have the opportunity to build a meaningful presence across the entire electric and hybrid powertrain spectrum across every vehicle category, and that opportunity is far, far more substantial in revenue potential terms.
If we go by S&P Global mobility, Indian hybrid and EV cars and the commercial vehicle market alone represents an addressable market of over 2.3 million vehicles, which would roughly amount to about a 24,000 crore opportunity in 2030 itself.
If you go to 2035, it will be many times this.
And this is even before we consider our longer-term global ambitions.
India is where we will begin.
But just like we've done with Driveline and Motor business, our ambition is always ultimately global.
Now, the actual question that some of you may have had is, why DENSO so?
But I think an even more interesting question is why Sona Comstar?
DENSO is the world's 2nd largest mobility technology company.
It has no shortage of potential partners across the globe.
But I believe they saw in Sona Comstar what we have been building over the last decade, a company with strong engineering capabilities, proven frugal execution and technologies that complement their own.
With their strength in hybrid and our strength in electric, I think it makes for a fairly killer combo.
It is a strategic partnership between two technology companies where each brings distinctive strengths to the table and together we can build something that neither company Sona Comstar – Q1 FY27 Earnings Call could have built as effectively on their own.
And that, in our view, is the hallmark of a successful long-term partnership.
Slide 8: To get into the details, the partnership consists of two joint ventures.
The first will focus on high voltage electric and hybrid powertrain systems for 4 and 4+ wheel vehicles, so all passenger and commercial vehicle applications, in short.
In this JV, Denso will hold the majority stake, contribute the relevant technology and intellectual property, and lead the business from a management perspective.
The 2nd joint venture will focus on 2 and 3 wheelers, where Sona Comstar has already established technology position.
Here we will retain majority ownership and management control while licensing our own technology into the joint venture.
Let me also clarify because we got some calls that our suspension motor business, together with all our other non-traction motor businesses remain completely outside the scope of this transaction.
Now, let me come to what I personally find one of the most satisfying aspects of this partnership, the royalty structure.
The ultimate validation of any technology is quite simple.
Technology has value when someone else is willing to pay to use it.
In this partnership, the royalty arrangements are equal and reciprocal in both.
JV2 will pay royalties to Denso for its high voltage technologies, while JV1 will pay royalties to Sona Comstar for our 2 and 3 wheeler technologies.
And it tells you that this is not a partnership where one company brings technology and the other brings manufacturing.
Both companies bring technology, both companies contribute intellectual property, both companies contribute engineering expertise, and both companies strengthen each other.
I believe that mutual respect is what makes partnerships successful.
And if I may end on a lighter note, I suspect we may be the first Indian automotive company to receive royalty income from one of the global mobility technology companies and that is certainly something as an Indian, everybody could be proud of.
Slide 9: Moving on, our new addition to the third growth engine is robotics and physical AI.
And I want to spend a couple of minutes explaining why we believe this is such an important opportunity.
Every few decades, a technology comes along that fundamentally changes almost every aspect of human endeavor.
Economists call these general purpose technologies.
Fire was the first, the wheel was another one, and more recently, electricity transformed the world.
The internet did the same in our lifetimes.
We believe artificial intelligence will be the next general purpose technology.
And so far, AI has largely transformed the digital world.
The world of bits and bytes.
But we believe that the next phase of AI will be different.
It will move into the physical world, the world of atoms, and that will transform almost every machine on the planet.
The machines will no longer simply execute instructions.
They will sense, they will think, they will act, and most importantly, Sona Comstar – Q1 FY27 Earnings Call they will continuously learn.
This is what we mean by physical AI.
So what does all of this have to do with Sona Comstar?
And the answer is simple, the same technologies that power modern electric and autonomous vehicles, motors, gearboxes, actuators, sensors, electronics, and software.
These are exactly the fundamental building blocks of intelligent machines.
People often think of automotive and robotics as two completely different industries.
We don't.
In fact, we believe those two industries have already started converging.
Hyundai owns Boston Dynamics.
There are companies making humanoids which are from the automotive sector.
And whether it's an electric robotaxi or an autonomous mobile robot, a collaborative robot, or a humanoid - the underlying technologies are the same or remarkably similar.
Therefore, Robotics and Physical AI is not a departure from our strategy.
It's a natural extension of the capabilities that we've been building for over a decade.
The long-term opportunity for these components is quite large.
Morgan Stanley has a report called The Robot Almanac.
I would encourage you to read it.
According to that, the global market for radars, reducers, and electric motors over the next 25 years could grow approximately 260 times, 590 times, and 260 times respectively, like absurdly large numbers.
They're expected to reach an estimated size of $60 billion for radars, $1.4 trillion for reducers, and $2.5 trillion for motors.
If we succeed in taking even a fraction of this opportunity, the future is very, very bright for us.
Slide 10: Now coming to this slide, this slide is about what we have already built.
So we're not announcing our intent to enter Robotics and Physical AI.
We're announcing that Sona Comstar has already entered.
Over the past year, we've invested in technology, invested in equipment, and we have developed products.
And even more importantly, we've been working very closely with customers.
We see 3 distinct revenue streams for ourselves.
The first is advanced components and subsystems, an area which is closest to our existing capabilities.
We have deep capabilities in motors, gearboxes and sensors.
These are all mission critical building blocks for intelligent machines.
The second is the perception stack and engineering services around perception.
Here we'll provide engineering and R&D services while also developing perception software and integrated hardware software solutions for customers so that whatever the customer requires, we're able to provide that part to them.
The third and perhaps the most ambitious is manufacturing of selected full robotic platforms.
Initially our focus will be on 2 platforms- autonomous mobile robots or AMRs, and cognitive collaborative robots or cobots.
Earlier this year we showcased the prototype of our first AMR at CES in Las Vegas, and development continues to progress fairly rapidly.
Oh, and one more thing, we already have customers, we've secured our first order for an advanced robotic subsystem.
Our second order is for perception engineering services for AMRs.
And our third combines both hardware and software.
It's a complete short range radar perception solution for an Indian commercial vehicle OEM.
Together, these three orders, they add ₹6 billion to our Robotics and Physical AI orderbook, which takes the total order book for Sona Comstar – Q1 FY27 Earnings Call this new vertical to ₹8 billion.
And what has pleasantly surprised us, is that unlike electrification products or a suspension motor product, this market may be developing far faster than we had originally anticipated.
We've obviously positioned ourselves early in that journey, so this is no longer an idea, an aspiration, and ambition.
It is now a business, a small business today surely, but one that we believe has the potential to become a meaningful growth engine for Sona Comstar over the next 10 years.
Slide 11: So before I move on to the more prosaic business of our quarterly performance, let me leave you with one final thought.
As we evolved from Sona Comstar 1.0 to Sona Comstar 2.0, we spent a lot of time thinking about two questions.
What should change?
And equally, what should never change.
So let me begin with what will not change.
Our purpose will not change.
Our values will not change.
Our commitment to our customers, our shareholders, and our people will not change.
Nor will the principles that have guided us over the last decade, Engineering excellence.
Disciplined capital allocation, operational execution, financial prudence, and transparency.
Those foundations will remain exactly the same.
What will change is the scale of our ambition.
We will pursue larger opportunities.
We will enter larger markets.
And where appropriate, we'll make larger investments and much larger strategic decisions.
I believe after yesterday's announcement we have entered the big league.
And when you enter the big league, it is wiser to make bigger moves.
However, whatever decision we make, we'll be judged against the same three questions that we have always asked ourselves.
Does it create meaningful value for our customers?
Does it create long term value for our shareholders?
And do we have the capability and management bandwidth to execute it well?
If the answer to any one of these questions is no. We'll walk away and that discipline is what has served us well over the last decade.
We believe it'll serve us equally well over the next.
Over the last 10 years together, we built one 10X company, our ambition for the next decade is to build another 10X company.
With that, let's now go back to the quarterly performance and the quarterly numbers.
Slide 12: So coming to the quarter, I'm happy to share this was the best ever quarter for revenue, BEV revenue, and BEV revenue share, with very healthy momentum, continuing across the business.
But as always, I will begin with the challenges.
Inflation continues to be the biggest near-term challenge.
Commodities and other input costs remain elevated.
They have impacted margins during the quarter.
April was tough, Sona Comstar – Q1 FY27 Earnings Call May was even tougher, but June showed improvement.
As material costs passed through and other cost reduction and mitigation measures started catching up.
Those of you who followed us know that costs pass through with automotive customers always lag inflation, so they come a little later.
This, along with the arithmetic impact on both revenue and cost, may continue to create some pressure on margin as a percentage.
However, the encouraging part is that directionally things have started improving as the quarter has progressed.
Beyond that, the operating environment remains uncertain.
We all read the news.
Trade and geopolitical developments continue to be choppy.
But frankly, they've been uncertain for so long that I don't think they should be used as an explanation anymore for business performance.
Our job is to manage through all the choppiness.
Now I'll move to the positives, of course, they are far more than the challenges.
Demand has remained healthy across all the markets we serve.
India delivered another strong quarter, particularly in passenger vehicles and electric two-wheelers, which was phenomenal.
Europe has been, surprisingly to many, it has not just remained stable, it's actually growing now.
And the US has also improved meaningfully, as the quarter has progressed.
China was the only one which remained kind of mixed.
However, for us, it was our fastest growing geography this quarter, because of the suspension motor ramp up and its success in China.
Second point, EV demand continues to gather pace.
Our BEV revenues were, I think they more than doubled during the quarter and BEV revenue share has also reached an all-time high.
Finally, business development efforts, this quarter, we secured new business across EVs, hybrids, and ICE across India, Europe, and North America, and across virtually every product category we operate in.
And that's, that's very gratifying for us because you know, usually there are times when some things do well, some parts of business don't.
This is the business that we've been trying to build, a diversified one which can grow strongly across customers, geographies, products, and powertrain technologies.
Slide 13: Now to the numbers, our revenue grew by 54% year on year, while EBITDA and net profit increased by 49% and 45% respectively.
EBITDA margin was 23.1%.
Margins were heavily impacted by input cost inflation, labor cost increases as well as the timing gap in the customer recoveries or the pass- throughs.
This was especially true during April and May, but as I mentioned earlier, June was significantly better.
We expect that these recovery measures will become progressively more visible from quarter 2 onwards.
There was also a product mix impact as traction motor sales grew quite rapidly, and as is well known to you, that product category has the lowest margins relative to our average company margin, so that also dragged it down a little bit.
Slide 16: Sona Comstar – Q1 FY27 Earnings Call Let me now turn to electrification, this was an amazing quarter for us.
We continue to see electrification gaining tremendous pace.
We delivered the highest ever BEV revenue and BEV mix during the quarter, and BEV revenue grew 107% despite EV demand in the US remaining weak.
This is quite a testament to how our EV business is no longer dependent on a handful of customers or one particular geography.
We have also added 2 new EV programs and 1 hybrid program, which takes our EV order book to 69 programs across 36 customers.
Slide 17: Now, let me go to our order wins.
So the quality of our order book continues to improve.
We are increasingly winning businesses across multiple powertrains, multiple geographies, and multiple product categories.
This quarter we received a new order from an existing North American customer for hybrid differential assembly, again, surprising but very gratifying.
If North America takes on to hybrid, I think this opens up another avenue for growth.
Second, we won 2 traction motor programs from a new age Indian electric two-wheeler vehicle.
Slide 19: To add to this, we also won meaningful ICE differential gear programs.
This is our first product category, so it often gets glossed over by newer and more exciting products, but I just wanted to reiterate that we continue to gain in this category.
We received an ICE differential gear program from a traditional North American OEM with an order value of ₹2.1 billion.
Slide 20: Along with additional business wins in starters, differential gears and railways, and at the end of Q1 FY27, our net order book stands at 240 billion, with EVs accounting for 64%.
As you can see, we've added robotics and physical AI to our orderbook, which is a small 3%.
But as they say, all great endings have small beginnings, hopefully, this is one of those.
Slide 22: So now, let me come to diversification, which is our 4th strategic priority.
This is one area where we continue to see a lot of tangible progress on our strategy.
For example, eastern markets contributed 59% of our revenue this quarter.
This was 56% last year.
This shows that there is a continued shift in our geographic mix.
We are seeing a similar trend across our product portfolio.
Our fastest growing business this quarter was EV suspension motors, followed by EV traction motors, and something that gets lost in the others category, are emerging product portfolios.
This includes steering bevel boxes, intermediate gears, epicyclic gear trains, input rotor shafts, and several railway products.
So with this, I will turn to our group CTO Praveen, to update us on technology.
Over to you, Praveen.
Sona Comstar – Q1 FY27 Earnings Call
Praveen Rao
Thanks Vivek, Good evening, everyone.
Slide 24: Our technology focus and customer centric approach continue to deliver significant business wins and shape our roadmap.
We are advancing market relevant products and solutions across automotive and railway applications from magnet-free motor solutions and exterior radar solutions to air springs, HVAC, and door systems.
Products under commercialization this quarter include short range radar sensors and advanced robotics components.
The short-range exterior radar sensor developed for a leading commercial vehicle OEM is designed to meet the upcoming Government of India regulations on advanced driver assistance systems, also known as ADAS.
The business win in advanced robotic components builds on our deep expertise and foundational capabilities in automotive product design, tooling and manufacturing.
A notable addition to our roadmap is the autonomous mobile robot or AMR.
This product brings together capabilities across motor, driveline, and sensor divisions, while also establishing expertise in newer domains such as robot perception, motion planning and control, telematics, reinforcement learning, and AI orchestration.
The AMR platform is being developed as part of a broader robotic portfolio focused on manufacturing and warehousing applications.
It is designed to support use cases across automotive, electronics, pharmaceuticals, FMCG, and other sectors.
The field of robotics and physical AI is expanding rapidly as smart and flexible manufacturing scales up.
Manufacturers are moving from isolated automation initiatives to connected and coordinated operations, creating opportunities for Sona Comstar in physical AI including components, actuators, and in some cases, full systems.
An interesting aspect of deployment of physical AI is the need for training.
This is an area likely to be the next frontier in cognitive robotics.
In summary, as we evolve from an automotive components company into a global mobility technology provider, we will continue to strengthen our core mobility portfolio while expanding into the emerging growth areas such as robotics and physical AI.
With this, I conclude and hand over to Rohit for the financials.
Over to you, Rohit.
Thank you.
Rohit Nanda
Thank you, Praveen.
A very good day to you all.
It's my pleasure to share our first quarterly results for financial year 2027 with you.
Slide 26: Our revenue for the quarter grew to 12,310 crores, a growth of 54% over the first quarter of last year.
BEV revenue grew by 107% to 436 crores over the same quarter last year.
BEV revenue constituted 44% of our automotive product sales.
Sona Comstar – Q1 FY27 Earnings Call EBITDA for the quarter grew by 49% to 303 crore.
EBITDA margin was 23.1%, which is lower by about 0.7% compared to the same quarter last year.
The margin was lower primarily on account of product mix and higher input prices, despite the positive impact of the operating leverage.
Our profit after tax grew by 45% to 181 crores.
PAT margin was 13.6%, which is lower by 0.7% compared to last year.
Between EBITDA and PAT, we had a positive impact on the margin from lower depreciation percentage and exceptional expenses booked in the 1st quarter of last year.
Whereas PAT margin was pulled down by lower EBITDA margin and lower net finance income.
Slide 27: Now on to the final slide on our key ratios.
All these ratios except VA to employee cost have shown improvement in this quarter.
In case of VA to employee cost, there is a decline compared to previous period, mainly due to change in the product mix in favor of assembly products.
Our return ratios continue to show gradual improvement, as I had indicated in the previous quarters as well.
The impact of QIP fundraise has been absorbed in the ratios, and incremental returns from businesses are now supporting these ratios.
Our net debt continues to be negative.
Therefore, net debt to EBITDA ratio also continues in a negative territory.
Both the turnover ratios showed improvement in this quarter, supported by a robust revenue growth.
Besides this, the working capital turnover ratio also improved due to a significant reduction in debtor days, which also made this as our best quarter from an operational cash flow perspective.
With this, we've come to the end of our earnings presentation.
I'll now hand over the proceedings back to the Nomura team.
Moderator · Conference Operator
Thanks everyone, we will now open the floor for a Q&A session.
If you wish to ask a question, please use the raise hand function located at the bottom right of the Webex page, and we will unmute your line and prompt you to speak, or you may submit your question via Q&A chat box addressing to all panelists.
Kapil Singh
Yeah, Vivek, by the time the question queue builds, probably I'll start off.
First of all, congratulations to you and the entire team for executing this, very significant and, momentous, joint venture, and we look forward to all the progress from this.
But I'll start off with a question on an area which I don't understand much, which is AI.
How should we think about this?
And compare and contrast this to the automotive business, in terms of, firstly, you know, we understand you have certain physical capabilities, but there is, probably half of the value lies in the software aspect as well.
So, is that, how are you going to target that, if at all?
And secondly, in terms of the return ratios, capital commitment, how are you thinking about it because it's a completely new and evolving area.
So, any guidance here in terms of how you're thinking will help?
Sona Comstar – Q1 FY27 Earnings Call
Vivek Vikram Singh
Sure.
So let's go back, Pratik, to that slide which had the services, etc. Yeah, the Robotics and Physical AI slide.
But first, Kapil one, thank you for being our host for 5 years, which obviously gives you the privilege of asking questions first and you have seen all our presentations.
So we've been talking about this software and hardware becoming almost one for a long while now, if you remember.
Our suspension motor product has 2 million lines of code.
Almost nothing we make today is just metal, it is metal and a few lines of code.
If you look at the car, a car today has over a million lines of code, even a regular one.
The more advanced electric vehicles who do are 5 million plus and robotaxis are actually physical AI products.
Robotaxis, now, what you want to classify them is up to you as an analyst.
But to be honest, a lot of these devices have already crossed that border.
The closest example I can give to make you understand this is, when electricity first came into our lives, it wasn't that it created revenue only for electricity utility companies or power plant companies.
Every single device in your home got connected to electricity and changed.
General Electric did not just build light bulbs- toasters, washing machines, vacuum cleaners.
The same thing will happen.
So that was the electrification of the machine.
This will be the addition of intelligence to the machine that these are thinking machines.
They can learn and calibrate their behavior as opposed to scripted machines.
I think the boundaries between industries will blur quite fast.
The things that go into, and I'll give you an example.
So you take a reducer that goes into a car, right?
We make the reducer for electric vehicles, that will have a 9 is to 1 reduction for the motor’s torque to be increased and RPM to be decreased, right?
In a humanoid, in a joint, that ratio will be somewhere between 100 to 160, but it is fundamentally the same concept.
It is much smaller, it is far, far more precise.
But it is the same product, and you will see the companies that are the new entrants into this place, even in China, if you cover the Chinese companies of robotics and physical AI and you'll see very, very similar names to what you are used to compare them with people like us, our competitors, in fact.
So it is a natural extension in that field.
Motor players are the ones who will get into frameless motors, and I think a few quarters ago we actually showed a humanoid and said how many motors and how many actuators actually go into one humanoid.
But a humanoid is not the only application.
A robotaxi is one, and AMR is one, a quadruped is one.
You will have multi-access robots that work in factories, can move between stations, and can do multitasking.
All of those require the same building blocks.
So that is one, and software is already something we do, the example of the win that we spoke about, and I think it's good that we waited one year to announce our entry after we won, because then these questions would perhaps have a suspension of belief element to it.
Now you don't have to.
So, our first service is one in, one in which we are training an AMR and providing the entire perception software stack.
That's it.
We're not building the machine.
We're providing pure software.
The third one is where we'll provide the device as well as the software.
So yeah, in a thinking machine environment, opportunities will come from all sides.
They will also come from people who do very hardware-oriented things like sheet metal, Sona Comstar – Q1 FY27 Earnings Call because, I mean, it has to be made of something, and those guys will perhaps still, we have value in a pure hardware thing, but most of us will be hardware plus software.
Returns, you know, how we have invested so far.
We were asked these questions in 2016 by our board.
That time, we didn't have external public shareholders.
In 2020 and 2021, by public investors, when we were investing in suspension motors and traction motors.
I think our record speaks for itself that we are fairly frugal in how we allocate capital, and so far, touch wood, our returns on innovation have far exceeded even our own high expectations.
Kapil Singh
Okay, thank you.
As long as Rohit approves of all the plans, I'm fine.
Vivek Vikram Singh
He's a very hard man to please, so if we can get it past him, you know that it must be something good.
Kapil Singh
Yeah, yeah, Sneha we can move along with the question queue.
Moderator · Conference Operator
Yes, we have a question from Pramod Kumar.
Pramod, you can go ahead.
Pramod Kumar
Congratulations to the entire team on the collaboration.
Vivek, my first question is on the joint venture 2, as you call it, the high voltage joint venture.
So what, what are the timelines you can share here, given the understanding you have with Denso, as to what, what should be the timeline we should see some bit revenue recognition starting or any kind of, some, some color on by when can we expect some more updates on the business, on the high voltage, because the two wheeler and the three wheeler traction motor is a business which is gaining traction any which ways and it goes to the JV straight away.
And also if you can share by the both the joint ventures, activation will be, on the same date or there could be some gap between the, good of, of the, the incorporation of the joint ventures and all of that.
So if you can just share some color on the timeline, sir.
Vivek Vikram Singh
Okay, the SOP timelines, I will answer, and I'll let the second part be answered by Rohit or Sat, whoever chooses to.
The SOP timelines, unfortunately, Pramod, we are restricted by confidentiality agreements on it, because, you know, multiple parties are involved, from DENSO’s side, from customer side, so we'll have to hold that.
But as soon as we humanly can is really the actual timeline.
But Rohit and Sat can answer on the specifics of the JV formation and which one will lead and lag, etc.
Sat Mohan Gupta
Hi, thanks, Vivek.
Rohit, you want to answer?
Rohit Nanda
No, no, it's okay, Sat.
Please go ahead.
Sat Mohan Gupta
Thanks, Rohit and Vivek.
Pramod, the first, JV will be leading it and the 2nd JV will be following it, so I can't share you the timing exactly.
But, the first JV is the one which will kickstart, faster.
Yeah.
Pramod Kumar
Yes, thanks a lot, and Vivek, I'll try another attempt on the product portfolio for the JV2 because Denso is a world leader when it comes to a lot of the Sona Comstar – Q1 FY27 Earnings Call hybrid systems.
They're by far the world leader, and, and have like 2 decades plus of experience on the hybrid side.
So, and, also they're pretty, as in, they developed the EV vertical, also the battery electric vehicle vertical also very well.
So if you can just help us understand what is the kind of capability, what it brings to, it brings to the joint venture because, we were not exactly fully updated on the, I at least I was not fully updated on your own solo plan on the high voltage motor as to what all parts you will be doing, whether that included, the, liquid cooling, the cooling systems and the inverters and all of that.
And, given Denso already has a very globally proven portfolio there, what could be the potential here?
If you can just help us understand some bit of sizing up of the market, the TAM, because you kind of gave us a pretty good view on the, on the, on the robotic side.
So if you can help us understand, or, or size up the opportunity here, which, one should look forward to, in this journey of 10 years.
Vivek Vikram Singh
Yeah.
So, good question, Pramod, and you're absolutely right, Denso is not a leader, it is by far the runaway leader when it comes to hybrid powertrains.
The electrification business revenue for Denso is above $8 billion a year.
That obviously, we get the JV2 gains immensely from that exposure and that would be a market leading position in itself.
The EV part, you're right, we have, made some progress and we will do more progress jointly.
There are some parts that they bring in, including, I mean, in controller technologies, they have the full spectrum.
You name it, you name any kind of technology in control systems and Denso has it in their portfolio.
And that strengthens our own controller thing.
What we are good at is the motor part, the manufacturing excellence design.
Because you, we start with frugal design because we're starting even at TRL level one, we do cost targets.
So, It is, you're building something for a very different market in which cost pressure is very high, which allows us to offer a compelling product.
So both of them put together should make a fairly, fairly strong combination.
Market size, I did say 2030, 24,000 crores, but if you were to look at 2035, this number will be many times that.
It will be maybe 3 times that, and that is what we are looking at.
Frankly, neither Denso nor us, have ever accepted anything less than market leadership.
We will leave it to your imagination on how much market share that that entails, but neither of us are people who like being second.
So hopefully, we, that gives some color.
I can't really say more than this.
Pramod Kumar
And anything on the capex intake for JV2
Vivek Vikram Singh
Sure, capex intensity of motor business and control system businesses is actually low.
I mean, even in our two-wheeler thing, as I think I've shared before, for ₹1 of capex, you can get 8 to 9 rupees of revenue easily in high voltage systems, Sat, how much do you think for ₹1 of capex, how much revenue is the thumb rule?
Sat Mohan Gupta
It will be at least 11-12 Sona Comstar – Q1 FY27 Earnings Call
Vivek Vikram Singh
Yeah, 11-12.
Yeah, because it's more about the technology thing.
It is know- how, the number of iterations you've done, it isn't a very capital intensive thing.
It is more engineering intensive.
Pramod Kumar
Hm and I understand that the competition intensity in this category is not as severe as the two wheeler space.
So if you can just help us understand when you look at the India, high voltage motor landscape, how many guys are actually out there who have got local manufacturing capability with high level of localization, and, or is it we're still relying on largely imported subassemblies getting put together here?
Vivek Vikram Singh
Pramod, your question has the answer, and I can't say more than that because I'll get into trouble because some of these things may not even entirely be legal.
Some of these things will be people claiming PLI when they shouldn't exactly.
So, I don't want to get into a contentious issue.
But what I will say is two-wheeler, three wheeler is far more competitive, and we are able to on our own take market leadership.
This one is less competitive because of the technology barrier.
High voltage technology is not easy to crack, and hence there will be lesser competitive intensity.
I think we'll make a fairly big dent in the market.
Pramod Kumar
Wish you all the best, sir.
Thanks a lot.
Thank you.
Vivek Vikram Singh
Thank you so much Pramod.
Moderator · Conference Operator
We have our next question from Nitin Arora.
Nitin, please go ahead.
Nitin Arora
Yeah, hi, good evening team, and thanks for the presentation.
My first question is, if you can, throw some light on this EV volumes which are going up, you know, just are you thinking about, capacity because on the recent calls, all the OEMs are just upsizing their capacity, on the EV.
So just wanted your take, how you are looking at the schedules or how you're looking, thinking about EV growing, EV market in India, Europe and US, what kind of traction you are seeing?
Is it, you feel that this is something really now coming at inflection, the kind of inquiries, what are you getting from OEMs?
So my first question is on that.
Vivek Vikram Singh
So, Nitin, as always, good to hear your voice.
EV is in a way, right now, we are not constrained by demand.
Actually, all our OEMs are not constrained by demand.
They are constrained by their own supply chain challenges.
We are definitely not the supply chain challenge, and if you talk to OEM please tell them, that if you're having capacity issues, please go to Sona Comstar, we have enough and more capacity for them.
Sat, do you have any capacity constraints?
Sat Mohan Gupta
Not right now.
Vivek Vikram Singh
I can assure you, neither does Vikram.
We have always built capacity ahead of markets and that is definitely not our problem, but unfortunately, Nitin, and Sona Comstar – Q1 FY27 Earnings Call as you well understand, any vehicle has hundreds of parts.
So even if one supplier becomes the bottleneck, the whole system has to stop.
If you read the book Goal, the slowest member of the team actually decides the pace of the group.
So unfortunately, we are able to sell less than we ideally would have, but not much we can do about other players in the supply chain.
Nitin Arora
And how, how's the EV, you're seeing traction in Europe and US because, and also if in Europe, do you see further traction on that supply chain area, which was getting a little weakened.
Vivek Vikram Singh
Yes, so Nitin, Europe is electrifying very fast.
I mean, whether it be fully BEV or, whether it be strong hybrids or plug-in hybrids, they are actually accelerating quite fast.
India is actually the fastest growing EV market in the world, I think, right now.
So India is doing phenomenally well.
USA, we are seeing a shift to hybrids as you saw even in one of our events, but the EV market is not doing so well in the US right now.
But despite that, I think we will see phenomenal, EV growth in the, in this year at least.
This is, I don't know, Nitin, if it's an inflection or not.
After COVID, I would have definitely said it was an inflection because this is just one quarter of data, let me have 2-3 data points, so another quarter or so, then we know that it's actually inflection, but it is trending very, very positively.
Nitin Arora
Just, lastly, you know, as I think, as Kapil said, even, I don't understand the third part of the business, I need to dwell more on this physical AI.
But when you started your electric business, whatever the number today is, it took you, I think, about 4 or 5 years.
You said you have 800 crores of orders already in the order book.
How we should think about this business ramp up because I'm sure when you're talking about opportunity pie, you will get more.
But is it from an execution perspective, is it going to take the same time or how we should think about the, the sizing of this business over the next 2 or 3 years?
Vivek Vikram Singh
It's a good question, Nitin, and I think I've answered this on a prior earnings call in which I said, first 3 years when you make a new product or get into a new technology, you make no money.
Year 4, you see your 1st $1 of revenue.
Year 5, you start making the 1st $10 million odd dollar number, and year 7 or year 8 is when it becomes a $100 million business.
We saw that with EV differential assemblies, we're seeing that with EV traction motors.
We will see that with suspension motors, pretty much the same timeline or time frame of how it happens.
I think this one will be faster, much faster, probably.
So, that's the difference, it is faster than our internal assumptions too.
How much too early to tell, but yeah, we will get to each of those milestones earlier than we typically used to.
Nitin Arora
Thank you.
Thank you, Vivek and team.
All the best as always.
Thank you.
Vivek Vikram Singh
Thank you, Nitin.
Moderator · Conference Operator
Next question is from Jay Kale.
Jay, please go ahead.
Sona Comstar – Q1 FY27 Earnings Call
Jay Kale
Good evening and thanks for taking my question.
And congratulations on the announcements, heartening to know.
You know, my first question is regarding your passenger vehicle motor.
You know, you have the JV with Denso, you have, you know you have tried your share of, you know, making the passenger vehicle EV motor in the last few years, so there would have been some developments around that.
And of course, now, what kind of capabilities you bring to that in this JV.
And also from a backward integration perspective, do you think that you have a significant lead compared to the, compared to your peers who are trying to get into this and your existing business can also capture a lot of that opportunity feeding into this, JV.
That would be my first question.
Vivek Vikram Singh
So Jay, the short answer, yes, long answer is, of course, even if you get a PO today, it'll take 3 years to SOP, right?
I mean, that's how automotive works.
32 months is the cycle.
But yes, we are well positioned because the supply chain is the same.
So there are 2 or 3 building blocks to this.
First is design, that, can you design your motor to be the most frugal, yet the best quality expression of what you're trying to build.
That, you, your job is to provide traction while using the least amount of material possible.
So that is the most efficient way to do it.
So design from a cost perspective from day 1.
Two, building the supply chain because, you know, no man can do this alone, and there is, it is an assembled product, as Rohit was mentioning and value addition at our end is lower.
Third, will be the knowledge of the market and hence designing a product that works for India.
So you need to know the duty cycle.
So you would have had to study it.
If you remember 2021, in our second or third earnings call, Jay, I'd mentioned that we have done an MOU with a three- wheeler company to get data.
For 1 year, we just captured duty cycle data to make better motors and inverters for the 3-wheeler market, and a year after that is when we actually launched the product.
So you have to work on all three and make a product that day 1 becomes the most competitive product in the industry, because in automotive, as you well know, it's not enough to be the best.
You have to be the best as well as the most economically competitive.
It is a combination of this that one has to work on always.
Of course, we will bring some of these, but Denso is a company we admire, like these are the companies you want to become one day, right?
Bosch, Denso, that's the league in which we also want our name to be taken one day.
They have taken 85 years to get there.
We are just 25 years old.
And one day, hopefully we will get there, but it comes by partnering with people of that stature.
And the question that you should ask is why would someone like Denso feel comfortable with someone like Sona Comstar?
We are 1/100th their size, I think, in revenue.
But the respect that we have got from them is definitely not 1/100th.
And that, that means we've been building something which is important, it is something that is worth being proud of.
Jay Kale
Great, my second question is regarding, you know, your view on how do you see this evolution of this market in terms of OEM adoption, was, you know, let’s take e-axels in context.
How do you see the adoption of OEMs, for e- axles versus, you know, taking the products independently and integrating.
Sona Comstar – Q1 FY27 Earnings Call And in your JV, you know, is there any future possibility of, you know, transitioning to that, or do you think that maybe the localization efforts of your peers are, are, are not up to the mark where you have a significant lead over them?
So just your view on the evolution of this market over the next 5-7 years.
Vivek Vikram Singh
Sure, so let's just first start with what is an e-axel.
An e-axle is an integrated assembly.
Which assembles a motor, an inverter, and a gearbox, right?
You add all of these, you get an e-axle.
Now this could be done by a tier one for an OEM or it could be done by the OEM themselves.
And frankly, both models are equally valid.
In early stages of electrification, when people are making far less volume, they're OK keeping the whole e-axle outside, but I suspect it will come inside also because, and Jay, you know how this works, the battery is not in your control, e-axle is also gone.
What is your design leverage as an OEM?
What is your cost leverage as an OEM?
What is your bargaining power?
Like, what are you making? the shell and the wheels, like, that's kind of not, that critical then.
So I think this will change, more OEMs may integrate it themselves, but for the JV, the JV can sell to tier ones who make e-axles.
It can sell directly to OEMs integrating motors and inverters themselves, and it can also sell to Sona Comstar, to our driveline division, where we could make the e-axle with the help of our own motor inverters.
So all three models are open, but ultimately the customer decides what they want and who they want it from, and we must always stay humble and know that the customer is the one who comes first, who is above us all.
Jay Kale
That's great to know.
I'll just squeeze in one last question on the robotics side, of course, this quarter you've been much more, you know, open about sharing a lot of details, than the last few quarters on them, of course, because of some developments.
Just from your perspective, have, has the market evolution surprised you positively over the last few quarters?
Or has Sona Comstar's pace of development been faster than expected, you know, for this, because there's a marked change on a lighter note on your comments in robotics in historical quarters, or maybe you are downplaying it, to currently on the developments.
Vivek Vikram Singh
Yeah, so Jay, I'll answer that we were downplaying it a little bit, one without proof of success, I think one should not talk about anything.
I know there are a lot of companies out there who talk about things that may happen in 3 or 4 years and we didn't want to be those and second, also remember last year was not that great for us.
I know we grew and everything, but not to our satisfaction.
And when you're not doing so well, right?
There are two tendencies: one, out of desperation, you start announcing big things.
And then people start, you lose credibility.
Which is why we downplayed it intentionally, that we will come when we have something positive, when we have something substantial, then we will talk.
Otherwise, you know, there are people who like, I mean, in India, you know, that mentality that people want to see you fail.
And if you're an innovative company, 100% they want to see you fail, and there'll be many critics, and they'll say, oh, these guys will just tell stories or something negative.
Why go through all that?
So when we are in a position of strength.
We are doing well.
We have the orders.
That's the right Sona Comstar – Q1 FY27 Earnings Call time to do it.
As always, under promise over deliver is a better strategy than promising before time.
To the first part of your question.
Both have surprised me.
Our team is brilliant.
Vikram's team has done wonders that they have moved so fast.
However, the market evolution, also Jay, is much faster than we expected.
Jay Kale
Great.
Thanks and all the best.
Vivek Vikram Singh
Thanks, Jay.
Moderator · Conference Operator
Next question is from Sonal Gupta.
Sonal, please go ahead.
Sonal Gupta
One question from my side, just going back to JV1, I mean, we're already doing very well on the traction motor for two wheelers and three wheelers, and that's been, I mean, clearly this quarter again, a very strong growth in that business.
So I'm just trying to understand the motivation for putting that in the JV and in what respects do you think Sona gains from putting that as a JV with Denso.
Vivek Vikram Singh
Sure, so, Sonal.
If a company like Denso wants to partner with you and they think they bring value, I wish you were from my industry.
I mean, to someone in my industry, it is, this question is kind of unthinkable that it is even a question.
Second, there is a customer base that is in a way not that open to us right now, that opens up.
Third, the export opportunity opens up for us to other markets where Denso is far more dominant.
And fourth, yes, on paper it's two different JVs, but in our minds and in our hearts, it is one JV.
It is structured differently, but we want to partner across the board, like I said, across vehicle categories, across technologies.
When you partner with someone, like when you marry someone, either commit fully or don't commit.
You can't pick and choose.
That is a very spreadsheet way of looking at life, and it seldom works out, in my opinion.
Sonal Gupta
Right, no, I'm just asking.
I don't know, I'm frankly not aware of how much Denso is focused on the two-wheeler, three-wheeler market, so that's why that question, and…
Vivek Vikram Singh
If they weren't focused, they wouldn't do it and they wouldn't pay money to do it is a natural, I would say, answer to that.
Sonal Gupta
Got it.
Thanks.
And just in terms of like, again, the only difference between the two sort of statements on the JVs is that in the JV2, we don't mention e- axle.
So just any thoughts there on why e-axle is in JV1 and not JV2.
Vivek Vikram Singh
Sure, e-axles in JV1 will be a very tiny market anyway, but JV2 will make motors and inverters. e-axles, like I said, this can sell to e-axle makers who are actually answered that in detail, but I'll say it again.
E-axle is an integration of motor, inverter, and gearbox.
There are many e-axle makers that we sell to today also, by the way. e-axles is not that, the guy who makes e-axles makes all of the components themselves.
We sell differentials to e-axles, large e-axles Sona Comstar – Q1 FY27 Earnings Call makers all over the world, and the e-axles could be integrated by the OEMs.
And like I said, there could be 3 models, JV can sell to the OEM, JV can sell to tier 1s making e-axles, and JV can sell to Sona Comstar, who could make e-axles.
So, then we could be making it in the driveline part of our business.
Sonal Gupta
Got it.
Okay, great.
Thank you
Vivek Vikram Singh
So and again, the ambition, by the way, like two-wheeler, three-wheeler, we're doing well in India, and we're 25%, but 25% is also not enough.
Why not more than 50%?
For that, you need to work in a slightly different way.
Second, India is not the be all and end all.
And if you want to go global, it does help.
Our brand is not as well known in this space as Denso’s is, like by a margin of, I think 100:1, they are better known than us.
Sonal Gupta
Got it.
Great.
Thanks, Vivek.
Thank you so much for answering my questions.
Kapil Singh
Yeah, hi Vivek, there are a few questions in the chat box.
Some of them have already been answered, but, I'll just try to run through them.
So, I think this question is specific to JV2, is it focused on the Indian market only, or will it cater to the global market through Denso?
Vivek Vikram Singh
Of course, I will try to answer it.
We begin with India and then we look at the world.
I think it is also in, Maebara San from Denso has answered even in the press release, I think there is a mention that in time, in phase two is when we would look at it.
Phase one is to get this up and running, then get Indian customers, start satisfying that, and then in phase two, we would also look at that.
So yeah, definitely on the anvil, but yes, it will take time.
Kapil Singh
Okay.
And then another question for JV2, so for reaching the revenue stage, would it be 2 to 3 years away?
Vivek Vikram Singh
I think I mentioned to Pramod that we can't comment on the timeline.
There are certain confidentiality I wish, I mean, you, you know, we are fairly transparent and if we could, we could have told it, but we can't share that.
Kapil Singh
Okay, so the question basically is asking this will entail the entire product development process that is validation, testing, etc. and then reach.
Vivek Vikram Singh
Of course.
Kapil Singh
Yeah, Okay.
Does Denso supply any of these products in India in EVs and hybrids?
Vivek Vikram Singh
Sat?
Sat Mohan Gupta
I think I'll pass this question.
Vivek Vikram Singh
Yeah, I think, yeah, we can't speak about it, and it is not fair to ask us this question, to be honest.
This is a question about a different company who's our partner, and they should be answering it, not us.
Sona Comstar – Q1 FY27 Earnings Call
Kapil Singh
Okay.
4th question, this is probably for Rohit, the VA per employee has been declining, can you elaborate on the reasons for the same, especially on a QoQ basis?
I think you touched upon it, but yeah.
Rohit Nanda
So I actually answered it when I covered this, but basically, when the product mix changes, so, as you all know, our motor and railway businesses are more of assembly businesses, whereas driveline business is where, you know, the value addition from raw materials stage to finished goods is higher.
So, depending upon which business is growing faster, this ratio tends to change.
So while the higher the better is, is obviously the rule, but the thing is that 4.5 times, itself is also very strong.
So I'm not trying to take away the fact that it has come down, but basically, it can vary from quarter to quarter.
So, FY27 number that you look at, that's purely based on Q1 revenue, so there is a shift, I mean, if there's a shift in one quarter, it will move like that.
So that's the explanation.
Kapil Singh
Okay, and then this question is on AI.
It brings tremendous opportunities but also raises ethical concerns and Sona Comstar has always committed to respecting human values, cultural diversity, privacy, fairness, etc. transparency.
So how will you ensure that these core values are maintained and protected?
Vivek Vikram Singh
Certainly, so, the applications you choose obviously decide the ethical guardrails, and it is a good question, a surprising one, I must say, but a good question.
The first thing you do actually, when you do any project with artificial intelligence involved.
Literally, even before the data structure mapping, you actually designed the guardrails.
That what are the guardrails for the data?
Also, you must know that because we supply to European customers, GDPR rules are so severe that it has to pass through a very high bar for data to be taken.
Now an amazing thing, that most of our perception stack is built around radar.
Now, radar cannot see you as a person.
Like they can detect your outline.
They know it's a human being, they can detect heartbeat, but it will not capture your face, your voice, and hence it anyway has that privacy layer built in because of the core technology.
But yes, this is something that we're always sensitive about, especially if it is a transmitting device.
But good question, it is always going to be built into whatever we do.
Fortunately, our customers are also the kind of people who need this to be built in as the first layer.
Kapil Singh
Okay.
Then we have a question on, you know, Rupees 8 billion order book for robotics.
When are SOPs for these orders?
Vivek Vikram Singh
They range, some of them are as early as next quarter, some of them next year, but they are not very far in the future.
Let's put it that way.
Rohit, you, you want to take a stab at this?
Rohit Nanda
No, but I think that's the kind of detail we can share at this moment.
So you're right.
I mean, most of this will start production, let's say within 12 to 15 months Sona Comstar – Q1 FY27 Earnings Call max.
I mean, like Vivek said, one will probably start within a quarter or so, and, the rest probably in a year or so.
Vivek Vikram Singh
Actually, 1 is this quarter, 1 is next quarter, 1 within 15 months.
Kapil Singh
Then how is the rare earth situation panning out?
Vivek Vikram Singh
Oh, it's been a while since we got this one.
Yeah, rare earth magnets are still restricted.
So heavy rare earth magnets cannot be imported.
Almost all that we do today is with light rare earth alternatives, and it's working fine.
We don't think there is going to be much change.
Like, we don't have an update, to be honest.
It's been the same way for the last 5 quarters now.
Is that a reference to the red earth magnet scheme of the government, or is it to the red earth magnet import situation?
I didn't fully get the question.
Kapil Singh
I think it's probably, to the rare earth shortage situation that we faced on imports.
Vivek Vikram Singh
Yeah, so then I've answered it, that we shifted to light rare earth alternatives and there is no real magnet shortage as shown by our EV traction motor business growth.
Kapil Singh
Okay.
I think this is an interesting question.
Please help me understand which product is expected to grow the fastest, the order 2, please, and which entails the highest margins.
Vivek Vikram Singh
Second, part will not answer.
The 1st part, I think it'll be one of Sat's products only.
Actually, Kapil, this a very hard question, yeah, because if let's say there is a product which has almost no revenue in the last year, actually, Amit might have some products which had no revenue last year and they suddenly will grow.
They will grow at infinity %.
But in the ones that already exist, I think suspension motors are growing the fastest rate.
The traction motor would be the second.
Vikram, unless you are going to surprise us all with something you are growing.
No, Vikram is choosing to ignore me.
Kapil Singh
Okay.
I think this is the last one that I have in the chat box, and, that is, I just need to clarify if we consume orders worth 15 billion, how are the revenues only 13 billion?
Vivek Vikram Singh
Sorry?
Kapil Singh
If we consumed orders worth 15 billion, how are the revenues only 13 billion?
Vivek Vikram Singh
Oh the order book consumption is of 10 years, right?
So you've got to like, divide by that much.
So, Pratik you want to take a stab at this one, you haven't got a chance for some time.
I think this question used to come in the first year of IPO and Pratik used to answer it.
So, good throwback.
And this is also, by the way, 5 years that we were listed.
Sona Comstar – Q1 FY27 Earnings Call
Pratik Sachan
Yeah, so basically the consumption we take out from all the future years for the orders.
So let's say if you assume the average life of an order is 8 years, so, then it is, the consumption from the quarter is multiplied by 32 times.
So that is why this kind of difference you are seeing.
Kapil Singh
Okay.
Great.
I'll pass it on to Sneha.
I believe we have one more, raised hand.
Sneha, over to you?
Moderator · Conference Operator
Yes, we have a question from Jay Kale.
Jay Kale
Yeah, thanks for, yeah, thanks for taking my follow-up.
Just one clarification, how do you see the execution timeline of robotics orders?
For autos, it's typically around 7 years, I guess.
But, how different is it for robotics?
Vivek Vikram Singh
Hmm, that is actually a very good question, Jay, and I don't think I know.
Because I don't think the guys making the robotics right now know also, because even the first generation has not ended its lifespan.
So good question, Vikram, you want to answer this one?
This is, I don't know the answer.
Vikram Verma
The pace at which people are making normally will mature, on the ground.
Vivek Vikram Singh
He's saying jese order mila (translation: once we get the order), normally how many years would it run till like, so I said I don't know what the model life cycle is in.
Vikram Verma
I mean, there will be a lot of evolution of the same product.
So, it is still growing, I mean, they're still figuring out.
So there will be generations.
I think unlike automotive, this generation changes will happen more frequently.
Vivek Vikram Singh
Correct.
Vikram Verma
So even the largest guys, has already started making the 3rd generation.
The 1st generation has not come on the shop.
Jay Kale
Okay, so I think this segment is as difficult for analysts as it is for manufacturers.
Vivek Vikram Singh
This is early.
It's like going back and electricity has just come into the world and you are in year 2 and now you're an analyst and trying to figure out what will happen in 10 years.
It is exactly that.
Jay Kale
Great.
All the best.
Vivek Vikram Singh
Or an experiment you can do, Jay, wake up in the morning and say each device that you interact with, from your toothbrush to your window to your alarm.
What if it was truly thinking and learning, and it could change the way things happen, and you will realize the potential is actually almost limitless.
Jay Kale
Perfect.
Great.
Thanks and all the best, Vivek.
Thank you.
Vivek Vikram Singh
Thank you, Jay.
Sona Comstar – Q1 FY27 Earnings Call
Kapil Singh
I think with that, we have come to the end of the question queue.
We don't have any further questions and we've run out of time as well.
So I'll thank everyone for joining this call and thank you, Sona Comstar team for giving us this opportunity to host you.
Always a pleasure.
And, Sneha with this, we can close the call.
Moderator · Conference Operator
Thanks everyone.
We will now conclude this call.
If you have any follow-up questions, please feel free to email your Nomura sales representative or corporate access team.
You may now drop off the line.
Vivek Vikram Singh
Thank you.
Thanks, everyone.
Bye.
Thank you.
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