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Sona Comstar has announced a joint venture with China’s Jinnaite Machinery Co. Ltd. (JNT), investing USD 12mn for a 60% stake to manufacture driveline systems and components for global and Chinese OEMs. The JV will combine Sona’s strengths in system design and precision forging with JNT’s casting capabilities and deep customer relationships in China’s EV market, which accounted for 66% of global EV sales in 2024. We believe this JV represents a significant growth opportunity for Sona as the company would not have entered this venture without a strong anchor customer (mostly BYD). Based on our estimates, the JV could unlock a total addressable market (TAM) of ~INR 16.7bn (~48% of Sona’s FY25 revenue), with potential upside if the JV onboards other global and domestic EV players like Tesla in China.

* A big opportunity:

- We believe the JV with JNT represents a significant growth opportunity for Sona, especially considering the sizeable TAM it offers. - Sona holds key IP in Bevel gears, vital for differential assemblies (DAs) in EVs. Under the JV, we believe Sona will supply Bevel gears from India, while JNT will handle casting to produce DAs for delivery to OEMs. For india business also, Sona outsources the casting business. - As per our understanding, current Chinese DA suppliers to BYD are generating margins of approximately over 30%.

- TAM calculation: ? Estimating that Sona– JNT JV secures ~20% of the share of business from BYD, which is projected to sell ~6.5mn vehicles in 2026 ? Realisation of ~USD100 per DA ? Considering 1.5 DAs on an average (4WD vehicles need 2 DAs, RWDs need 1DA), ? The TAM for Sona BLW could reach approximately ~INR 16.7bn (48% of the Sona BLW’s FY25 revenue) ? The TAM could expand significantly if major players like Tesla (China) and other chinese OEMs are considered potential customers of the JV. If this JV scales as expected, it could serve as a substantial driver of long-term growth for Sona in EV component space ? We are currently not updating our estimates, as no financial information related to JNT has been disclosed

* Details of Joint Venture: Sona Comstar has formed a JV with China’s Jinnaite Machinery to manufacture driveline systems for global automotive OEMs. Sona will invest USD12mn for a 60% stake, while JNT will contribute USD 8mn in assets and business. The JV will begin revenue generation from 2HFY26, combining Sona’s strengths in design and precision engineering with JNT’s casting expertise and customer base. It aims to tap into China’s booming EV market, which accounted for 66% of global EV sales in 2024 and is expected to grow at an 11% CAGR through 2030.

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