SONACOMS Q2 FY27 Earnings Call: Record Revenue of Rs. 1,546 Cr, 23-25% Margin Guidance Reaffirmed

SONACOMS held its Q2 FY27 earnings call on October 26, 2026. Here's a quick read of what management said — performance, strategy, and the outlook ahead.

Record Quarter on All Headline Metrics, But Margins Compress

• Revenue of Rs.1,546 crore (+35% YoY, +18% QoQ) — highest-ever quarterly revenue, exceeding the prior all-time high of Rs.1,310 crore in Q1 FY27; EBITDA of Rs.356 crore (+23% YoY) and PAT of Rs.223 crore (+29% YoY) were also records.
• EBITDA margin at 23%, down 2.3% YoY — driven by product-mix change (traction motors grew ~50% QoQ, above internal expectations) and input inflation from the continuing West Asia war (steel, copper, oil derivatives) plus freight rates that nearly doubled vs previous quarters; management said both factors are largely beyond its control, making near-term predictability difficult.
• PAT margin at 14.4%, down ~0.5% YoY — lower depreciation% was a positive, lower EBITDA margin a drag.
• BEV revenue crossed 50% of automotive revenue for the first time — up 129% YoY and 40% QoQ, led by India electric two/three-wheeler demand via traction motors; US EV deliveries broadly unchanged, which management cited as evidence of reduced dependence on any single customer or geography.
• Quarterly EBITDA of Rs.356 crore — roughly equals the company's full-year revenue at the time of its IPO.
• H1 FY 2026-2027: revenue, EBITDA and PAT grew 43%, 34% and 36% YoY — to Rs.2,857 crore, Rs.659 crore and Rs.404 crore respectively; H1 EBITDA margin at 23.1%, down ~1.5% YoY on the same mix and input-price drivers.

Rs.36 bn of Wins; Strategy Broadens to "EPIC Mobility"

• Rs.36 billion of new business won in Q2 FY 2026-2027 — third-highest quarter ever, spread across differential assemblies/gears, traction motors, controllers, starter motors, sensors and railway products; net order book closed at Rs.251 billion (second-highest in history).
• First strategic priority broadened from electrification to "EPIC mobility" — electric, personalized, intelligent, connected solutions; 4 new EPIC programs won in Q2 FY 2026-2027 (3 in BEVs, 1 in intelligent & connected), taking the total to 75 EPIC programs across 37 customers at end of H1 FY27 (44 in production, 31 yet to start).
• Key EPIC wins — helical limited slip differential (existing EV customer), rear radar sensor (new Indian two-wheeler customer), integrated motor controller (existing EV customer), and increased traction motor volumes via a revised PO from an existing customer.
• ICE entry into differential assemblies — an existing differential gears customer converted; a small initial order but a large TAM, alongside a starter motor program and new differential gear programs across North America and India.
• 3 new products commercialized in Q2 FY 2026-2027 — highest ever in a single quarter: helical LSD, air springs for railways, and rear radar sensors for two-wheelers.
• Robotics/physical AI is 4% of the order book — management hopes it becomes what EV has been over the last decade.

Motors Outperform; Eastern Markets Now Two-Thirds of Revenue

• Traction motors grew well ahead of industry in Q2 FY 2026-2027 — Sat Mohan Gupta (CEO, Motor Business) attributed this to higher wallet share with existing customers, OEM growth, and good three-wheeler traction; management credited in-house capability to move to light rare earths during the magnet disruption, with the CEO noting OEM supply challenges are the best times to gain wallet share.
• Suspension motors reached ~7% of revenue in Q2 FY 2026-2027 — driven by end customer Neo's new model exceeding expectations; order book currently limited to one customer (spanning variants), with significant conversations underway with other OEMs; management sees potential to be "massive" but gave no definite outlook.
• Eastern markets contributed almost two-thirds of revenue in Q2 FY 2026-2027 — vs about one-third when the "look east" decision was made two years ago; e-2W/3W is now 14% of revenue; auto/non-auto split steady at 70/30.
• Differential assembly rebound — all 3 large EV customers in the space picked up in Q2 FY 2026-2027; management characterized this as reversion to mean after Q1 FY 2026-2027, when "all the bad things in the world came together in a perfect negative synchronicity."
• Differential gears ~9% and differential assemblies ~3% of the world market (stated Q2 FY 2026-2027) — management expects legacy businesses to keep growing "for a fairly long time"; European OEMs seeking an alternative supply chain to China are driving more legacy wins in H1 FY 2026-2027.
• Traction + suspension motors combined annualized run-rate of Rs.1,400 crore — both developed in-house organically over the last four years; roughly equal to the entire company's FY21 revenue.

23-25% Guidance Reaffirmed Despite "Exceptional Inflation"

• Margin guidance of 23-25% reaffirmed (period unspecified) — CEO Vivek Vikram Singh sees no reason to change the range despite two quarters of ~23% EBITDA margins in FY 2026-2027 (Q1-Q2), citing "exceptional inflation" — the worst he has seen in his career — which he does not expect to persist at current levels for long.
• CFO Rohit Nanda: ~23% is the ballpark if the world operates normally (period unspecified) — flattish material prices are manageable given pass-through with a lag; CEO caveat: margins hold "unless oil goes to 150, when all bets are off."
• Pass-through mechanics dilute percentage margins arithmetically — with price at 100, material cost at 75 and margin at 25, a rise in material cost to 80 fully passed through keeps absolute margin at 25 but dilutes the percentage to ~23.8%; the reverse applies when material prices fall.
• H1 FY 2026-2027 operating cash flow of Rs.594 crore (90% of EBITDA) — aided by a Rs.44 crore working-capital release; net of ~Rs.148 crore capex, free cash flow was Rs.446 crore, more than 50% higher than FY 2025-2026 full-year free cash flow.
• Cash and investments of Rs.1,966 crore at end-September 2026 — ~Rs.1,900 crore gross / Rs.1,400-1,500 crore net per Rohit Nanda; net debt-to-EBITDA remains negative; H1 FCFO was more than 1.5x the FCFO generated in the entire FY26.
• M&A stays selective — management will stay patient as long as cash-to-EBITDA does not exceed 1.5; only 3 acquisitions in the past decade; the four filters (Vivek Vikram Singh): product relevance for at least the next 15 years, potential top 5-10 global market leadership, margin- and return-accretive financials, and being "good for the world."

Physical AI Aspirations; Railways Pipeline; JV Timelines

• Capability across 60% of the humanoid robot bill of materials — hardware plus perception software stack; management aspires to be a global supplier and views AMRs, intelligent industrial robots and robotaxis as part of the same physical AI opportunity set, with AMRs possibly a bigger opportunity than humanoids.
• Robotics orders ~4% of a 250 million order book — small relative to company size; management declined to name any customer when asked about Tesla; Rs.62 crore of robotics capex was declared in Q1 FY 2026-2027 (completion period unspecified); robotics products, including AMRs, to be demonstrated at the Bharat Expo in February (FY 2026-2027).
• Inflection timing unknown (period unspecified) — the CEO analogized to EV, which was 1% of revenue in 2019 and is 51% now (FY 2026-2027), and expects the robotics curve to be "very steep" whenever it starts; management cited compute costs falling ~1,000x and open-source physical AI models, with sim-to-real transition the slower bottleneck.
• Railways: no business-wise forward growth guidance — Amit Mishra said new product introduction will be the main growth driver over the next three years, with a pipeline sufficient to support growth over the next 5 years, subject to on-time launches; air springs first supplied in Q2 FY 2026-2027, first HVAC batch supplied in FY 2026-2027, electric panels started small, and new products under development in brakes, couplers and suspension.
• Denso JV timeline — Rohit Nanda said the company is targeting to close JV1 (carving out of the business) by end of December 2026 (Q3 FY 2026-2027), possibly spilling to January 2027 due to advisors' and partners' year-end holidays; JV2 has not yet been formed, with closure targeted sometime in the first half of calendar year 2027.

10x Ambition Reiterated; Rare Earth Curbs and Mix Remain Watch Items

• SONACOMS 2.0 ambition to grow 10x over 10 years reiterated — Q2 FY 2026-2027 gave higher confidence in delivery; management's stated aspiration implies a 25% CAGR over the medium term (specific FY not given), with different businesses growing at different rates in different quarters.
• China's export restrictions on heavy rare earth materials remain in place — management sees no signs they will be eased; the company cannot currently use heavy rare earth magnets (which offer much higher BH max for motors) but would try to use them "wherever it is imperative" if they become abundantly available again.
• Return ratios expected to continue improving — all key ratios improved in H1 FY 2026-2027 except VA-to-employee-cost, which declined due to product-mix shift toward assembly products; turnover ratios improved significantly on robust revenue growth.
• Analyst-projected net cash of Rs.2,800-3,000 crore by end of FY 2026-2027 — Vasudev Banerjee projected Rs.400-500 crore of FCF in H2 FY 2026-2027 plus Rs.900 crore of Denso proceeds by end of FY 2026-2027; management countered that Denso proceeds will attract tax, with capex, working capital and JV2 capex absorbing funds, but a "substantial cash balance" is expected at end of FY 2026-2027.
• Humanoid robots on factory floors under evaluation — management is assessing deployment for repetitive tasks on payback, with first use cases in unsafe or low-acceptability tasks; replacing humans "just for the sake of it" is explicitly not a target in a country with a large population like India.
• Driveline division won the 2026 Deming Prize — for Total Quality Management, after a 9-year effort led by Vikram Balaji's team.