Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Sona BLW Precision Forgings Limited (NSE: SONACOMS) Q4 2026 Earnings Call dated Apr. 30, 2026
Corporate Participants:
Vivek Vikram Singh — Managing Director And Group Chief Executive Officer
Praveen Chakrapani Rao — Group Chief Technology Officer
Rohit Nanda — Group Chief Financial Officer
Aditya Zawar — Unidentified Participant
Sat Mohan Gupta — Chief Executive Officer of the Motor Business
Amit Mishra — Head of Investor Relations
Analysts:
Kapil Singh — Analyst
Unidentified Participant
Unidentified Participant
Amyn Pirani — Analyst
Jay Kale — Analyst
Nitin Arora — Analyst
Gunjan Prithyani — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Sona comb stars Q4FY26 earning group conference call. Please note all participants line are in the listen only mode as of now. There will be an opportunity for you to ask question after the presentation concludes. Please note that this call is being recorded. We request you that you place your lines on mute except when asking a question. Some of the statements by the management team in today’s conference call may be forward looking in the 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 names or relationship due to confidentiality reasons. Please refrain from naming any customer in your question. Now I will hand over the floor to Mr. Kapil Singh, Deputy Head of Research India and Lead Autos Analyst at Nomura. Kapil, please go ahead. Thank you.
Kapil Singh — Analyst
Thanks Neha. Good day everyone. Once again it’s my pleasure to host the management team from Sona BLW. We have with us Mr. Vivek Vikram Singh MD and Group CEO Mr. Vikram Verma CEO driveline business. Mr. Satmohan Gupta, CEO motor business Mr. Praveen Rao Group CTO Mr. Rohit Nanda Group CFO Mr. Amit Mishra head railway business, Mr. Pratik Agarwal, head investor relations and Mr. Pratik Sachan head Strategy and M and A. Now I will hand over the call to Mr. Vivek Vikram Singh for his opening remarks and presentation.
Vivek, over to you please.
Vivek Vikram Singh — Managing Director And Group Chief Executive Officer
Thank you K and welcome everyone. Q4 was a best ever quarter across the board. The quarter saw us hitting our highest ever revenue, highest ever EBITDA, highest impact, BEV revenue as well as BEV revenue share in the history of the company. But as always in our policy when talking to our shareholders, we’ll begin with the challenges. First, inflation has hit the industry pretty hard over the last five months. All major commodities for US, steel, aluminum, copper have continued to move up. This has been further amplified by a sharp increase in freight, packaging and energy prices.
Frankly, almost everything linked to petrochemicals has become more expensive. And while a large part of this commodity inflation is passed through, one, some parts are not passed through and two, there is always a lack of. And that lag, along with the arithmetic impact on both revenue and cost will put pressure on our margins which we expect to continue seeing in the foreseeable future. The second headwind, if you will, is the increase in minimum wages which was announced by the Haryana Government effective 1st April 2026 this will have some cascading impact on our labor cost.
However, we are working to mitigate it through productivity improvement, through tighter control and headcount addition and better workload management. Since we are a high growth company, we believe we have some levers to absorb part of this impact over time because whenever we add manpower, we can be more prudent in having less manpower growth as compared to the revenue or production growth. Lastly, gas availability has been a challenge. As all of you would know, we have partially mitigated this by shifting part of our gas requirement to electric heating by optimizing gas flows and modifying certain processes.
These initiatives have helped us to reduce our gas requirement by nearly 20% at a company level and the key point to note is that despite this constraint, we did not have any production loss at all so far. Now coming to the good news, which is, as is usually the case, it far outweighs the bad news. So first, electrification is clearly back in focus. Bore, of course, is always, always deeply tragic and there is no positive way to look at the human cost of war. But one evident outcome is the renewed urgency towards energy security and electrification.
We have started seeing this in the data as well. So in March, BEV sales grew by nearly 45% year on year in EU. In India, electric cars and two wheelers grew 65% and 45% respectively year on year in March and both are trending above 50% in April as well. So we think it’s a sustained trend of electrification growth across the board. Even North America saw its best monthly BEV run rate in March ever since the US subsidy cuts for ev, which had been a setback for that subset of the industry. So all in all, after a period of weak EV sentiment, the EV narrative is shifting again.
And as all of you would know, we are fairly well positioned to gain from this. Secondly, our anti fragility thesis has started playing out. We’ve always believed that we built a business that tends to emerge stronger from periods of disorder, and Q4 is evidence of that thesis. We won four new driveline orders. This is significant for two reasons. First, we won three driveline orders from European OEMs in a single quarter. This is the highest we’ve ever done in a single quarter from Europe. Frankly, this is the first EV order win from Europe in almost four years.
This gives us confidence that the current global reset in supply chains can open meaningful opportunity for us and have market share gains in Europe, which are meaningful for us. Also, order wins were not limited to BEVs. One of the four orders this quarter was for a hybrid platform, which reinforces our views that hybrids are an opportunity and not a risk. So whichever path electrification takes in whichever geography, we have the capability to participate and to win. Third, we are entering FY27 with the strongest balance sheet we have ever had.
We closed the year with nearly 1270 crores of cash and our cash generation remains strong. Our FCFO upon EBITDA remains at a high level and this financial strength gives us valuable optionality. Optionality to invest, optionality to grow at a time when others may be constrained in a volatile world. I mean, this is what makes our business more antifragile. Fourth, now this has always been our strategic priorities ever since our ipo. But I want to press upon diversification. So this quarter, if you saw North America PV sales were clearly weak while Europe had the best quarter in four years.
Now, because we are meaningful players in both, the net effect was in a way mitigated because of this. In fact, the difference between North America car sales and Europe car sales was one of the narrowest difference I have seen apart from the COVID and semiconductor crisis here. But what I have to comment on and what truly stood out was India. Passenger vehicles, commercial vehicles and electric two wheelers all hit their best ever quarter in Q4. And India’s share in our mix has now crossed 50% for the full year.
And this goes to show that our geographic diversification is working and weakness in one market does not materially affect the overall growth trajectory for the business. Lastly, we are making strong and consistent progress in RAD for our newly acquired railway business. This quarter we received approvals to supply two new products, electric panels and H Vac systems. So in a short span of almost 10 months, we’ve expanded our railway product offerings beyond safety critical brake systems and couplers.
Now it includes products that enhance passenger comfort and not just safety. We supplied the first batch of electric panels for locomotive applications and we will start supplying H Vac systems this quarter. So new product development remains a foundational growth driver across all of our businesses. Now I go to our financial performance. In the last quarter, revenue grew by a fairly strong 47% year on year while EBITDA and net profit increased by 32% and 17% respectively. Here I want to reiterate that our business recovery has been fairly robust and well, to be candid, it’s well ahead of our own expectations.
If you’d met me in the end of June and asked me if this is a quarter that we will have in Q4 I think I would have been very happy and would have thought you of being more optimistic than I am. So I want to thank my entire team. All of them have done very well to enable us to bounce back so quickly. I’ll also touch upon bevs. This was our best ever quarter for both BEV revenue as well as for BEV revenue share which has reached 39%. BV revenues grew 22% year on year and this is despite EV sales in the US declining by 28% year on year in Q4.
The mix as I said, is the highest ever at 39%. And this, this kind of goes to show that EV business is not overly dependent on any one market, any one category or any one customer. And that is what we have been trying to build. Yes, there will be years and quarters in which you will have blips and setbacks, but overall the strategy is working and working well for the full year. We I’ll say this was a tough year. There’s no way we would have wanted to end up here if you’d asked me 15 months back.
But if you see how demoralizing the lows of Q1 were for us professionally, to the loss of Sanjay in Q1, the US tariffs, the magnet ban that happened in Q1 and an increasingly challenging and volatile geopolitical environment, I’d say we as a team have had to endure and overcome a lot both personally and professionally. And yet we have delivered 26% revenue growth, 13.5% EBITDA growth and 11% packed growth with sequential improvement across all metrics. I think it’s fairly reinforcing of the belief I have in our business and in our teams.
And despite consolidating the lower margin railway business or having a high growth from the lower margin traction motor business, we have still managed to end FY26 with a full year EBITDA margin of 24.7%. Now I’ll come to electrification message is simple. Momentum is back and it’s strengthening every quarter while full year BEV revenue declined marginally. That is due to that extremely weak quarter one that we had. Since then they have improved consistently and we’ve ended Q4 with the highest ever BEV revenue.
The revenue share has also followed a very similar trend. We also continue to add to our EV order book. We’ve added three new EV programs and one new hybrid program. And importantly we also added two new EV customer in Q4. So at the end of FY26 we have 67 EV programs across 35 customers, 37 of them are already in production and 30 are yet to enter production, which gives us a healthy pipeline for future growth. Now let me spend a minute on the new wins. Because they’re directionally important, the amounts may not be very large, but directly they’re a very good signal.
First, we added a new European customer for differential gears for their EV program in North America. Second, we won an order for EV differential assemblies from a luxury PV OEM in Europe. Third, we received a new order from an existing European oem. This is for hybrid differential assemblies. And fourthly, here we supply to a tier one, where this EV differential assemblies program is in India, which will supply to both Indian and European OEMs. It’s a shared program and both of them are existing customers of sonarcombstone.
Now, these bills matter, I would say beyond the numbers, because they show that our business development efforts are bearing fruit, especially in Europe and across powertrains, EVs and hybrids, and across geographies, Europe, North America, India. And this is exactly the kind of diversified growth platform that we’ve been trying to build for the last decade. So this is obviously our scorecard at the end of the year on how we have done in business development. If you remember, in Q2 we had done a significant correction to the order book because of one particular model.
Despite that, we have ended FY26 with fairly similar last year levels. And this is despite the growth we’ve achieved during the year. During the year we won 31 new programs and added three new customers, which of course validates our relevance in the broader automotive as well as the EV ecosystem. Coming to the order book, I’ve covered the EV programs already and I also wanted to highlight the non EV wins because there were quite a few. So in Q4 we won 7 non EV differential gear programs and all of them from existing customers which totaled 300 billion rupees of addition to the order book.
The remaining order wins came from either segments like starter motors and railways. Basically, the order momentum is broad based. It is across powertrains, across geographies and across customer type. So at the end of Q4 FR26, our net order book stands at 237 billion, with EVs accounting for 70% of the order book. Moving to a fourth, fourth priority, which is diversification. And we made, I’d say, meaningful progress here. When I wrote about our look east strategy in the annual report, it wasn’t just words or a long term theme that would play out over years.
It was a statement of deliberate effort to broaden our focus as well as footprint in new geographies and you can see that the results are already visible. Eastern markets contribute 60% of revenues in Q4 compared to 40% in the same quarter last year. This also proves that we can diversify without compromising on growth or margins and the same trend is visible on the product side. So one takeaway that I will give you. Last year our top four products contributed 86% of our revenue. This year that same 86% of revenues actually spread across top eight products, so double the number of products to consume the same percentage of revenue, which means revenue base is becoming broader and less dependent on a few products.
If you look at the product growth story, it was fairly encouraging. Sequentially, the fastest growth came from traction and suspension motors followed by differential assemblies and differential gears. And it’s always good to see our newer products gaining scale. But it’s very heartening to see our old horses, our legacy products which are differential gears and differential assemblies, continuing to keep growing and keeping pace with our new products. The market segment analysis is broadly the same as enter the end of nine months.
So with this I’ll turn to our Group CTO Praveen to update us on the technology roadmap. Over to you Praveen.
Praveen Chakrapani Rao — Group Chief Technology Officer
Welcome everyone. The year began with significant enhancement to our product portfolio with the addition of railway products to the roadmap. This also marked a significant step in our journey to diversify from pure automotive space to being a player in the wider fast growing mobility space. It has also added capability in domains such as brakes, suspensions, couplers and railway electronic systems. Our foray into other mobility domains was further strengthened with an MOU with Neura Robotics of Germany.
This has truly opened opportunities in the space of cognitive robotics, AMRS and humanoids. On ADAS front, we are progressing well on industrializing our first ever in cabin radar solution for a passenger car application. Likewise, we are in advanced stage of development of exterior radar solutions that can support Indian commercial vehicles. In meeting the upcoming ADAS regulations, we continue to commercialize new products, the latest addition in the fourth quarter being electric control panel and H VAC systems for railways.
Both these products demonstrate our strong capability in design, development and commercializing complex electronics, electro mechanical and electro pneumatic systems including the hydraulic motor controller that we announced earlier this year. We commercialized three new products. In summary, we at Sona Comstar continue to innovate, strengthen our roadmap, align with rapidly changing market conditions and continue to provide value to customers be IT components, subsystems or full systems. With this I turn to Our group CFO Rohit to update us on financials.
Over to you Rohit.
Rohit Nanda — Group Chief Financial Officer
Thank you Praveen. A very good day to you all. It’s my pleasure to present our fourth quarter and full year results for the financial year 26 PU. Our revenue for the quarter was 1272 crores which is a 47% growth over the same quarter last year BEV revenue was 359 crores which is 22% growth over fourth quarter and it was 39% of our automotive revenue. EBITDA for the quarter was 311 crores which is a growth of 32%. EBITDA margin was 24.4% which is lower by 2.7% compared to the same quarter last year.
In this there is a base effect of 1.9% due to full year PLI income accrued in the fourth quarter balance 0.8% impact is due to product mix and commodity price inflation. Profit after tax was 192 crores which is a growth of 17% over last year. PAT margin was 14.7% which is lower by 4.1% compared to last year. Of this 4.1% nearly half was due to lower EBITDA. There was a 3.4% effect because of lower net finance income due to deployment of funds in railway business during the year. And then there was a net positive impact from lower depreciation and higher tax close to about 1.3% coming to the full year performance.
Our full year revenue was 4475 crores which is a 26% growth over FY25BV revenue was 1154 crores which was 34% of our automotive revenue but it was lower by 6% compared to the previous year. EBITDA for the year was 1107 crore which is a 13% growth. Margin was 24.7% which is lower by 2.7% compared to the same period last year and that’s mainly on account of change in product mix and to some extent higher fixed costs. Profit after tax for the year had a one time impact of 30 crores after tax from new labor code.
Adjusted for this one time exceptional cost, our PAT was higher by 11% at 670 crores. Adjusted PAT margin is lower by 2.2%. That’s mainly due to lower EBITDA margin and lower net finance income coming to the cash flows. During the year we generated 659 crores of cash from operations net of capex spend of 369 crores. We generated 290 crores as free cash flows. Apart from these, other major cash movements include nearly 1800 crores of aggregate amount which we used for purchase of railway business, additional land that we purchased for about 110 crore and there was a payment for last tranche of acquisition of novelic shareholding.
Besides this we distributed about 200 crores as dividend to the shareholders and we added some short term borrowings of about 226 crore and 86 crores of interest income. These were positive cash inflows. As a result of all these items we ended the year with a cash and investments of 1269 crores. This brings us to the last slide on on the key ratios. As I had explained in the last two quarters also the newly purchased railway business has a different cost structure and even the working capital cycle is also structured differently.
This has flown through some of our key ratios in this year and that is why you see dip in some of the ratios namely value addition over employee cost and working capital turnover ratios in case of return on capital employed. This has come down mainly due to the fresh equity which we raised in September of of 24. We expect it to start improving over the medium term as only part of the capital has been deployed so far. In case of return on equity, it has already started to improve. If you compare it with the previous two quarters as the deployment of capital in the railway business continues to bring incremental positive impact over finance income which it substituted in the P and L account, fixed asset to turnover ratio has dropped this year to 2.9.
That’s primarily because of new capitalization and purchase of land that we’ve done in this year. However, we expect it to also start improving as the new capex done in this year will start to generate revenue in the following financial year. That would be all from me. So we have come to the end of our earnings presentation. I’ll now hand over the floor back to the Namura team.
Operator
We will now open the floor for Q and A sessions. If you wish to raise question, please use Raise hand function located at the bottom right of the Webex page. We will unmute your line and prompt you to speak or you may submit your question via Q and A chat box Addressing to all panelists. Please be reminded to keep your questions to maximum of 22 questions. If you have more questions please return to Q. Thank you. We have question from J. Kale. You can go ahead. Jay, you can go ahead please. We will move on to the next question from Aditya Zawar,
Questions and Answers:
Aditya Zawar
Thanks for the opportunity. Couple of questions from my side. So in the previous call we had talked about bankruptcy of some of the peers in Europe and we understand that the largest company in that is acquired by somebody. If you can throw some light that how are we seeing the situation? Is there any opportunity that we are seeing from the remaining two companies? That is my first question.
Vivek Vikram Singh
Some of that has already started flowing in. You saw some of the new wins.
Unidentified Participant
Okay.
Vivek Vikram Singh
Other one which is the third asset which has got acquired by somebody, obviously we can’t comment on that and how they will do in the future is up to them. Our conversations will be with the customers directly and whatever opportunities come, we will keep reporting as and when we win. But overall I don’t think it is a material change in the opportunity set that Europe presents for us. I think it will still be a fairly good place to win a lot of business over the next 12 months or so.
Aditya Zawar
That’s, that’s good to know. In question is on Novalik, we understand that they are setting up, you know, manufacturing in Tamil Nadu. So how is the, you know, progress in terms of engagement with customers? Any sense you can give what could be the potential kit value? And in the past you had indicated that you’ll be also, you know, interacting, you know, targeting US and Europe initially with Novelic. So you know, with geographies, are we targeting any update on that?
Vivek Vikram Singh
Sure. So on the manufacturing and production thing, I can have sat answer that on the overall opportunities. Europe continues to look good because next year is when in cabin safety has to be part for getting the NCAP certification. So it was moved by a year. So what would have been a great year in 26, now that’s moved to 27. So that’s on plan what they’re doing in India. Sat if you are there, you can fill a detail.
Sat Mohan Gupta
Thanks. For Novalec India we have set up the entity in India and we have started the launch process for one of the customer. 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 assembly line in house and we’ll be using that assembly line.
Aditya Zawar
Any sense on you know, kit value or the quanta? I mean just ballpark. How should we think about the ramp up
Vivek Vikram Singh
As you know one, we don’t use the phrase kit value because to be honest, I don’t understand it. I don’t understand what kit is there. I mean we supply a sensor that is the part. Second, giving away pricing information is a Competitive disadvantage.
Aditya Zawar
Fair enough, Fair enough.
Vivek Vikram Singh
Appreciate it. And before you go, for all those on the call, I think Aditya and Investig launch a pretty good initiative. So if you have children between the ages of 12 to 18, is organizing a trip to China to see the automotive ecosystem, see robotics. You have the time, Please do take them. I think need to look at what’s going on in the rest of the world because we do need technology in this country.
Aditya Zawar
Yeah. Thank you. Thank you so much. All the best.
Operator
Your next question is from Vijay Pandey. Vijay, you can go ahead. I think he got disconnected. So we will take. Next question from Amin Pirani.
Unidentified Participant
I
Operator
Mean you can go. Yes,
Amyn Pirani
Hi. Sorry, am I audible? Because I had some issues. Okay, yeah, thanks for the opportunity. Actually my question is something that we had discussed a few quarters back. While in Europe the EV penetration continues to rise, I think part of the EV opportunity, I think you will agree, is also a Chinese OEM opportunity because the Chinese are gaining market share in Europe. So while we are bidding orders from the European OEMs and which is obviously great. Any updated thoughts on how do we approach the China opportunity not just in China, but even outside of China, which is becoming bigger and more important for the Chinese OEMs themselves?
Vivek Vikram Singh
It’s a good question. I mean, it is a question that we frequently ask ourselves. 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 the 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 break into.
So let’s see how it evolves. So if you go back into history and look at the 70s model when Japan was just exporting their cars. So what is happening today with China has happened before. Japan did that and then because of geopolitical reasons, protectionist policies, they had to shift production to the countries in which they were selling. Only then did opportunities for local suppliers actually come about. So it will take a bit of time. So the surest way is to get in in the China for China supply chain for the current model.
Over time as these guys set up in Europe or US, then we will be competitive because of duty reasons in the China for China supply chain. It is harder to do right now.
Amyn Pirani
Okay, thanks for that. And any update on how is the tariff situation now? Because obviously there was a deal and then there was a Supreme Court decision and now all of this is happening. So what is the latest on what is the tariff, if at all? And have things changed, improved, remain the same? You know, any, any update on that?
Vivek Vikram Singh
You know this is a question a lot of people will not know the answer to. But Section 25, which covers a large part of what we export, continues to remain the same. The Supreme Court rul did not have a bearing on Section 25 because that’s under another national emergency act which Supreme Court did not actually pass any judgment on. The remainder has obviously become easier and the tariffs have become lower because the country tariffs are kind of gone. But that again my answer, I mean is the same I gave in Q1 of last year, which is tariffs are paid by importers and not by exporter.
So importers have to figure it out what that tariff is. And if the Section 25 tariffs are 25% for everybody, which is what the case is, then you are not worse off or better than before. As long as our pricing or tariffs are lesser than China, it is a good thing. Second, there is a five year, I think almost concession given to OEMs with a certain percentage of domestic value addition in the US to claim back the tariff impact. So you would be more or less covered within that.
Amyn Pirani
Okay, okay.
Vivek Vikram Singh
Tell a story way better than ever can. Right. It is the end of the year. Our revenue hasn’t materially come down from the US at all, nor have margins. I know there were a couple of analysts who wrote that our EBITDA will drop from 25 to 12 and a half etc. Etc. On the 8th of April. But as most things hastily done are, it was a half baked and uninformed analysis. It doesn’t work that way. Things are usually binary decisions. They either happen or not. Now that a whole year is gone, you can see what is the real impact, the secondary impact that I alluded to back one year back that it will have impact on demand because it is after all inflationary in nature.
Right. All tariffs are inflationary. Prices go up, demand will go down. And you can see the SAR that they talk about full year car sales number is between now 16 to 16 and a half. One million cars have been lost due to this inflationary impact. Unfortunately everybody who supplies to that market will suffer from.
Unidentified Participant
Yeah, yeah, understood.
Operator
We have next question from J. Kale. Am I
Jay Kale
Audible?
Operator
Yes.
Jay Kale
Yeah, thank you. Thanks for taking my question. So my first question is regarding the Bev commentary. You know, three, four months back we had seen major global OEMs taking huge write downs on their global EV investments. And then of course in the last two, three months we’ve seen in a new revival of this category. You as a supplier, what are your mitigation strategies given that Even today global OEMs are talking of monitoring the situation based on the West Station crisis. To really go all out and say that this is a sustained demand momentum coming back.
So you know when the customers are not able to project long term trends, your suppliers, how would you allocate capital to these businesses and mitigate either not under investing or over investing in this category going ahead.
Vivek Vikram Singh
So Jeb, 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? Does it affect demand if a model is discontinued? Of course it does. Last year we saw the full impact of that, right? We lost 300 crore from one customer alone. And that can happen but does it happen frequently?
Not really. Second is what is the level of abstraction you’re at. So if you apply the same product you produce, you supply to multiple customers, you are far more de risk. If you do it across geographies also your de risking is even higher. But I don’t even think, I mean 2/4 back when the pessimism was at the peak would be the right time to ask this question now Jay, the tide shifting very very fast and in the opposite direction I would say I don’t think there is much concern we have. But on your second question in capital allocation, as much as you can try to invest in fungible capex that that same Capex can be used for producing parts for another customer.
Customer. This is a problem that happens when lines or investments are so specific that they can only be used for one model of one car maker. Those are the ones where capital allocation become very very tricky. So if you put capacity like we have for example for traction motor, we have a million electric motor capacity overall more or less that with a little bit of tweaks you can use it across customers. 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.
Operator
Next question is from Nitin Arora. Nitin, you can go ahead
Nitin Arora
In my question the first question is on a product of what we have Is suspension motors, if you can talk about that, how is that progressing with respect to specific I think China launch was there and how big you know you’re looking to cross sell, let’s say in this reset which you talked about in Europe or in any other areas, how big opportunity this can become to you? That’s my first question. And second on the railway business, how are we looking at growth next year? You know, if you can talk about that.
Vivek Vikram Singh
Sure. So first question I would let sat answer but my one liner is suspension motor is going to be the fastest growing business by far. I mean triple digit growth is not really common. So it is also got the advantage of small base but it will be very very good because the customer we supply to their model has had an amazing launch and the product performance and the product acceptance is genuinely overwhelmingly good. But sat over to you on suspension motors.
Sat Mohan Gupta
Sure Vivek. I mean we launched the suspension motor last year and though I mean it was on one of the model of the customer during the year the vehicle has done very good and so the customer has now launched on their other premium models and the volumes are going very good and the product is perceived both in China and rest of the world with a very good quality ratings and also with the performance of the motor and the complete system. So the opportunity is high. I mean we are looking at very high volume as Vivek said, I mean three to four times growth compared to the last year.
The acceptance of the product in China market as well as it’s being perceived in European market also. So our end customer is working with other OEMs in the European and it has the wide acceptability in automotive sector.
Vivek Vikram Singh
Yeah. So nitin hard to say because it’s so high that it’s hard to put a number on it. It could be a very big material part of our revenue. I mean this year, at the end of this year it’ll still be single digit. Next year maybe it even touches double digits. That’s the amount of growth you can have in that product. But depends a lot on where the next customer is and the ability of our customer clear motion to win the next customer. And on railways obviously Amit will answer that question
Amit Mishra
Then you know we don’t give guidance on growth for say year by year. So I will look at more like next three to five years where we do we see growth coming from railways. There are multiple levers. First is even today there is more demand than what we are servicing. So first is by improving our own process improvement, working with supply chain. We can do more than what we are doing. Second, there are gaps white spaces even in our existing product. So we talk about brakes, coupler, suspension, but even there there are white spaces.
We are not covering every sub segment and every part of these systems. So we are working on them. We don’t call them as a new product when we talk about new product. But we are working on variants to cover new types of rolling stocks where we are not present today. I think that will be the second major driver. So next three years I think these two I think will be the major driver when we are looking at three to five years. There are new products which are also we are bringing them to the market.
We are getting approval this quarter we announced H Vac and electric panels. There are other products where we are developing and we believe those products will become significant drivers in three to five years. So for next five years I think these are what we have identified as growth opportunities. One, to improve supplies, improve capacities at our end. Second is filling white space within brakes, couplers and suspension. And then the new products, I think they will become significant drivers in three years time.
But overall we are confident about good healthy growth over next five years in railway business based on products which are already under development and not counting any other products that we may add in future.
Unidentified Participant
Thanks Abit Nitin, Anything else?
Unidentified Participant
Thank you. Thank you. Thanks a lot team for the answers. Thanks a lot
Operator
From Gunjan. Gunjan, please go ahead.
Gunjan Prithyani
Just a quick follow ups from my side. I think just continuing on the railways question that Nitin asked. Amit, can you quantify the market size of some of these new products that you mentioned added in this quarter as well as the last quarter? I think Electric control panel, H Vac etc. Any idea on the market sizing for these products?
Amit Mishra
See H Vac and Electric Panel. Both are large segments or large market. H Vac is about between 2000 to 2500 crore market size and electric panel is also about 1500 crores. So in the context of the size of our railway business, these are two large segments. But then this is covering all types of rolling stock. So both electric panel and H Vac have applications from locomotives, passenger coaches, train sets as well as in Metro. Today we have made a start. We have entered these segments in electric panel.
It will take us 12 to 15 months to cover all types of rolling stock. Because there our development is more advanced. In H Vac. It will take at least three years for us to cover all types of rolling stock especially in the segments where we want to play. Because the approval cycles are very long field trials are much longer there. So yeah market opportunity is very large. But it takes about 18 months to three years between two products to cover the entire range of rolling stocks. And that’s why in the answer to the question asked by Nitin I said new products will become a meaningful driver from third year onwards.
In the next two years it will be more operational improvement as well as our existing products where we are trying to fill some white spaces.
Gunjan Prithyani
Okay, got it. Useful. And just second question, you know is on the commodity impact that we saw in this quarter about 80 basis point, is it more to do with the lag in the pass through to the customer and we should see this normalizing or how do we think about it or is it some of the commodities are elevated like energy cost etc have also gone up. Is that something that we absorb for now and we’ll wait when it sort of normalizes. So how do we think about the commodity cost going ahead?
Vivek Vikram Singh
Sure. But Gunjan, it’s not 80bps for commodity. 80bps is commodity and product mix. And as you know traction motor has been the highest growth driver where the margins are lower. So my bet I don’t have the breakup. Rohit can answer better but majority of this 80 bips would be product mix related, not commodity related. But Rohit if you can answer for last quarter or what would it look like this year?
Rohit Nanda
So Gujan, this 80 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 lakh. So it is largely because of the lag effect. But you also have to recognize that the commodity prices continue to trend up. So it’s not as if you know this has stopped. So till the prices stabilize this I think commodity price inflation margin impact and you also know there is a numerator denominator effect also wherein the percentage margin gets impacted.
So to that extent, you know, historically also since you’ve also been tracking the company now for a fairly long time, you’ve seen that in a commodity inflationary cycle the percentage margin tends to sort of take a dip margin may not get impacted. So I think till we have a commodity price inflation, you will see this impact one way or the other.
Gunjan Prithyani
Okay, got it. No, that’s helpful. And just coming back to Vikon on the, on the traction motor. Sorry, this is last question. The only traction motor is there any change in the business pipeline you’re seeing because of the whole, you know, the noise around ev seeing more, you know, more favorable policy support from government and in that sense OEM’s trying to build more around it. Is there any pipeline change that you’re noticing in traction motor and how would you sort of, you know, talk about the growth in traction motors over the next two, three years?
Like you said, suspension will be the fastest growth. Does this also sort of fast?
Vivek Vikram Singh
Traction will be the second fastest because it already has a decent base. It’s almost 10% of our revenue now. Suspension motor is smaller. Hence it will have triple digit type of growth rates. This will have high double digit growth rates actually maybe. Yeah, very high double digit growth rate for some time. The reason is this and Gujarat. I’ll just like to replace one word, not the noise, the signal around electrification. So one is where we are already there on the programs. The volumes are going up, I would say slightly more than what we had assumed on existing programs and we are obviously seeing new inquiries.
So it’s both policy wise. Also Gunjan, I think there is a growing, growing concern in the government as you know our country. If you look at all industry, I’m not talking about automotive, it’s about 80, 20. That 80% is petrochemical based or oil and gas based energy and 20% alone is electrification. There is a very high need for electrification to increase from 20% to cover. And I’m talking across not just automotive. And I think you should see over the next 18 months a lot more policy push to reducing our country’s oil and gas exposure.
This is also the reason currency remains weak. So there is a very very high realization of how this dependence is bad for us. And a lot of work should happen in the next 18 months from policy side, consumer demand side. Also I expect that as more and more people realize that the TCO in a inflated diesel and petrol price environment, the TCO is so much better for electric vehicles, especially if they are for any economic use, if it’s used as an economic assets. So three wheelers delivery, two wheelers electric LCVs, buses.
I think the pace of electrification is going to go up significantly.
Unidentified Participant
Okay, got it. No, this is helpful. Thank you so much. I’ll join. Back to you
Kapil Singh
Vivek. We have some questions in the chat box so I’ll just read out few of them. So one is always Sona progressing on rare earth magnets. Maybe you can give us an update on the whole situation.
Vivek Vikram Singh
Yeah, no update as of now. As you know there is a policy that has been released by the government and when we have anything that is material and Reportable we will. For now we do not use any heavy rare earth magnets in any of our products. So that’s where we are as of today.
Kapil Singh
Okay, on the order book there is a question what proportion has clear volume, visibility and pricing stability over the next two to three years and how should we think about conversion into steady revenues and margins as these programs ramp up?
Vivek Vikram Singh
100% has volume, visibility and pricing stability but it is just impossible to answer how volatility will affect next two, three years. So as you know in our industry there no such thing as firm commitment. Volumes are indicative volumes only. You take your call. So when we put orders in order book we take a call on how much to discount the volume projection given by customer. We have been doing this for a while so we do have a fair idea of how much to adjust by. But then there are years like the COVID year semiconductor chip crisis here.
Right now there is frankly an ev and going back to Gundin’s previous we don’t have a demand problem. Actually we have a problem or not. We our customers, they are not able to produce enough to supply the demand right now and that is not because of us. It is because of weaknesses in the supply chain where certain suppliers are finding it hard to ramp up that quickly. So this works both ways that there are orders in the order book which when eventually converted will be far higher and there are some which will be lower but over time pans out and it is pretty much around that same number.
Kapil Singh
Okay, one more question is on the railways how should we think about steady state asset turns margins roce versus your core EV business and will this growth structurally improve or dilute overall returns?
Vivek Vikram Singh
It will improve returns because from a return perspective they are very very high return businesses. It may be slightly dilutive on margins but return wise it will be much higher.
Kapil Singh
Okay then this question is on byd. Have you tracked recent decline in BYD sales following removal of EV purchase tax exemptions? Automakers that build their strategies around budget PHEVs and BEVs seem to be hit hardest given that 70% of SONA’s order book consists of BEVs and PHEVs. Do do you view this shifting subsidy landscape as a structural risk?
Vivek Vikram Singh
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 on their way out almost. So yeah. Not. Not really is the answer. I don’t know. Rohit, you want to add because I don’t know what to say in this one. Actually I think this is more if we had a huge exposure to China or one particular guy or something. But we don’t and it isn’t I think pertinent.
Kapil Singh
Okay, and then cash on books. Is there any M and A potential in pipeline?
Vivek Vikram Singh
Nothing that is reached a stage which is worth sharing or reportable? We are always evaluating M and A opportunities at any given time over the last three years we would have evaluated over a hundred 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 on opportunities that could add to us. But that doesn’t also mean that if you just have cash, you do M and A just for the sake of deploying capital.
Because that kind of pressure, as I mentioned before, that anything done hastily and without prudence does lead to bad results. So no, we have cash, but it’s not to burn. It is very hard earned cash. It’s shareholders cash. It is our duty as a responsible company to deploy it only when we get an opportunity that is amazing and process all four of our filters that we have already spoken about that whatever we put it in, we must be able to be confident that the product will last for the next 15 years.
Second, whatever we do, we must be able to take top five position in that category. If not, it’s not worth doing. Third, we should make good money and good financial returns from doing so. And fourth, that it should be good for humanity if all these four conditions are done. That is only then do we even consider an opportunity.
Kapil Singh
Okay, is worst of commodity pressure behind or should we anticipate increasing pressure before pass through happens and margins improve or stabilize.
Vivek Vikram Singh
That is a multi trillion dollar question in some sense. Because if you can figure out when the war will end and when oil and gas and all these things will go back to normal. Yeah, you’ll be far more wise than I am. I have no idea.
Kapil Singh
Vivek, on this front, you know, we have historically talked about 24 to 26% margins. So would you like to give an update on that? Are we comfortable with that band?
Vivek Vikram Singh
No, I’m not. We had already said that it will be 23 to 25 after the railway acquisition. So that is the band. 24 to 26 is the band prior when we with our core business. I think now it is 23 to 25 and that I think we can say we should be able to continue being in that bank.
Kapil Singh
Okay, great. How are things shaping up on the non automotive front? Apart from railways? When will we see any developments on robotics and EVtols.
Vivek Vikram Singh
So development soon. But if the question is when will you see meaningful revenue? Assume if your investment horizon is less than three years, none of this has any meaning for you as an investor. It will only come after if we can go back in time. I think 2021 is. When we announced 2021, we won the suspension mode order, right? Yes. Now 2026 is the first year that it will be in hundreds of crore. So it takes four to five years for anything which is new product. And if you’re doing it organically to actually get there, usually first zero to three years you don’t actually earn any money.
You actually spend more money than you are. Year four you start making some money. Your first bit of revenue starts tickling in which was the last calendar year for suspension. And then you get to hundreds of crores. And if God is kind and your job is good and you’ve made a good product, then you get to the thousands of crore. Same thing happened with EV differential assembly. We started in 2016 till 2018. I don’t think we made meaningful money. 2019 started becoming meaningful and now it’s as you know, fairly meaningful.
That’s the trajectory any new product development cycle will take. I think Amit also answered for when he was asked about H Vac and electric control panels. It is a three year cycle. It is not magic that we make something and then immediately we start selling it because our process is B2B. Second we make safety critical or mission critical parts that have very long testing and safety cycle and we are not in a rush to cut that just for financial gains and actually endanger our reputation, our trust that has been built over decades.
So we will always play it this way. But developments you will keep hearing as and when we develop, you will see the progress that we are making on each of those projects.
Kapil Singh
Ladies and gentlemen, that was the last question that we had on behalf of Tamura. I thank all of you for joining this call and to the team of Sona Comstar for giving us this opportunity to host you. We can. Sneha. We can close the call. Thank you.
Operator
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. Thank you so much. Thank you everyone for your time. You may now drop off the line. Thank you.