Sonam Limited FY26: Strong Revenue Growth, But Margins Feel the Heat

Sonam Limited, a Morbi, Gujarat based manufacturer of clocks, clock movements, and calculators, closed FY26 with a sharp jump in scale but a clear squeeze on margins. The company reported revenue from operations of INR 17,099.36 lakhs (about INR 170.99 crore), up 64.21 percent year on year. EBITDA came in at INR 1,509.41 lakhs (about INR 15.09 crore), while profit after tax (PAT) stood at INR 732.24 lakhs (about INR 7.32 crore).

The headline growth number was strong, but the operating story was more mixed. EBITDA grew 12.31 percent, and PAT grew 15.63 percent, which meant profitability expanded much slower than revenue. Management attributed the pressure to competitive intensity and higher raw material costs. It also flagged geopolitical issues in export markets, particularly disruptions linked to the Middle East conflict that impacted shipments and increased freight costs.

What the business sells and how it operates

Sonam operates across two stated business verticals: the clock segment and the calculator segment. The clock segment includes analog wall clocks, decorative and designer clocks, alarm clocks, table clocks, and LED digital clocks. The calculator segment includes “Check and Correct” models, with a portfolio of models such as ST-405, ST-512, ST-515, and ST-900.

A key part of the company’s positioning is backward integration. The investor presentation highlights in-house manufacturing of clock movements as a core strength, with the movement described as the “heart of the clock.” Alongside finished products, Sonam also sells clock parts such as movements and cases.

From a route-to-market perspective, the company sells domestically through distributors, wholesalers, dealers, retailers, and also serves corporate and institutional customers through bulk and customized orders. Internationally, it supplies through direct importers in different countries.

FY26 financial performance: Growth at a cost

The profit and loss statement shows total revenue of INR 17,170.95 lakhs in FY26, compared to INR 10,550.19 lakhs in FY25. Total expenses rose to INR 16,147.94 lakhs. Profit before tax (PBT) was INR 1,023.01 lakhs and PAT was INR 732.24 lakhs.

The compression in profitability is visible in margins. The company reported an EBITDA margin of 8.79 percent for FY26, down from 12.74 percent in FY25 and 14.55 percent in FY24. PAT margin also declined to 4.26 percent from 6.00 percent in FY25.

In the concall, management directly addressed this disconnect between revenue and profit growth. It pointed to competition and raw material price increases. It also cited the impact of war-related disruption in key geographies, which has affected exports and freight costs.

Financial summary

Exports and geography: Reach is wide, but Iraq is important

The investor presentation provides a geography-wise revenue bifurcation, separately for domestic and international revenue shares.

On the domestic side, the revenue share is spread across multiple states. Kerala (15.39 percent) and Tamil Nadu (14.58 percent) are the largest state contributors in the table, followed by Gujarat (10.46 percent), Rajasthan (10.34 percent), Maharashtra (10.26 percent), and Uttar Pradesh (10.00 percent).

On the international side, the table shows Iraq as the largest contributor at 37.86 percent of international revenue, followed by Turkey (11.58 percent), UAE (10.16 percent), Nepal (9.90 percent), and Sri Lanka (8.00 percent). The company also reports presence in countries including Bangladesh, Cameroon, Jordan, Nigeria, Saudi Arabia, Uganda, Mali, and the USA.

This footprint matters because the concall commentary linked near-term export disruption directly to the Middle East conflict. Management said the company has export orders and that goods are ready, but shipments are pending due to logistics issues. It also said freight costs have increased. Management described this as temporary, but the immediate impact is that export sales conversion can be delayed even when demand exists.

Operating capacity, distribution, and working capital signals

The company highlights installed capacity of 72 lakh clocks per annum and 240 lakh clock movements per annum. It also states a production area of more than 200,000 square feet. During the concall, management stated current capacity utilization is around 50 to 60 percent.

In terms of network, the presentation lists 150 plus distributors and 35,000 plus retailers, suggesting a broad domestic reach. Management’s stated strategy is to deepen penetration in existing markets while adding distributors and channel partners in regions where it remains underrepresented.

Working capital commentary was limited but specific. Management stated that its working capital cycle includes debtor days of 29 and creditor days of 37. It also said that a significant share of business is on advances, stating that it operates with about 70 to 80 percent in advance, while credit is extended mainly to old customers.

Strategy: Premium push, distribution expansion, and cautious e-commerce

Management’s forward narrative for the next few years is centered on three themes.

First, it aims to expand its product portfolio over the next four to five years, with an emphasis on innovative clocks and a stronger presence in the premium category. This includes new designs, contemporary collections, and value-added products.

Second, it plans to expand its distribution ecosystem by appointing additional distributors and channel partners in underpenetrated regions, with the stated goal of building a stronger pan-India presence.

Third, it is testing e-commerce carefully. Management said the company is present on Amazon, Flipkart, and Myntra, but highlighted that wall clocks carry a damage risk during shipping. It said it is currently in a trial phase for two to three months to evaluate returns and damage levels before scaling online sales more aggressively.

FY27 guidance and what to watch

On the concall, management gave explicit revenue growth guidance of 25 to 30 percent for FY27. It also stated that it has a strong order book, including export and corporate orders, though some exports are delayed due to logistics constraints.

Management also discussed product positioning. It said that earlier its focus was around an MRP of INR 3,000, and it has now launched products with MRP around INR 3,000 and approximately INR 6,000, describing this as a shift toward value over volume.

On margins, management said margins will improve year on year, but also suggested that margin percentage may not rise in a straight line due to competitive dynamics.

Closing takeaways

FY26 was a year where Sonam scaled sharply, with revenue from operations rising to about INR 171 crore. But the same year also highlighted how quickly margin structure can change when competition tightens, raw material costs rise, and exports face disruption.

The next year’s narrative is built around a 25 to 30 percent revenue growth target, premiumization of the product portfolio, distribution expansion, and a measured approach to e-commerce. Investors tracking FY27 will likely focus on two practical questions: whether export shipments normalize as logistics improve, and whether the shift to higher MRP products translates into better realized profitability even in a competitive market.