Sona BLW Precision Forgings Ltd. share price target

SONACOMS’ margin (excl. railways division) was in line with our estimate; however, PAT was ahead of estimates due to higher other income.

SONA BLW (SONACOMS)’s adjusted EBITDA margin came in below our estimates in 4QFY25 due to a model changeover at one of its key OEMs as well as an adverse mix. Adjusted PAT exceeded our estimates because of higher-than-expected other income from surplus funds.

SONA BLW (SONACOMS) reported 3QFY25 operational performance in line with our estimates, while PAT beat our estimate thanks to higher other income.

SONA BLW’s (SONACOMS) 2QFY25 performance exceeded our estimates with revenue of INR9.3b (est. INR8.8b), driven by order book execution and BEV growth.

SONA BLW Precision Forging (SONACOMS)’s 1QFY25 operating performance was in line on all fronts. The healthy revenue/PAT growth of ~22%/24% YoY, despite a weak environment, stems from its growth in the BEV segment along with an effective execution of the robust order book.

SONA BLW Precision Forging (SONACOMS)’s 4QFY24 operational performance
was in line, while lower tax led to a PAT beat.

Sona BLW’s (SONA) Q2FY24 revenue, margin and earnings came in line with our estimates with EBITDAM coming in at 28.2%. BEV revenue was 12% higher QoQ at INR 2.1bn (27% mix), with BEVs contributing 78% of the unexecuted orderbook.

Sona BLW’s (SONA) Q1FY24 EBITDA margin came in at 27.8% (up 70bps QoQ) driven by mix improvement (150bps lower mix of domestic e2W BLDC motors). Revenue at INR 7.3bn was 2% lower QoQ, with ~INR 0.25bn impact from lower e2W volumes due to FAME subsidy reduction.

Sona BLW’s (SONA) Q4FY23 EBITDA margin came in at 27.1% (flat QoQ) as the benefit of operating leverage led by 9% QoQ increase in revenue was offset by ~150bps QoQ decline in gross margin. Company recorded its highest quarterly revenue at Rs7.4bn driven by increase in EV orders, as BEV revenue grew 37% YoY to Rs2bn, resulting in revenue mix of 28%.

Sona BLW’s (SONA) Q3FY23 EBITDA margin came in at 27.2% (up 200bps QoQ) as it clocked an all-time high quarterly revenue of Rs6.9bn along with ~280bps QoQ gross margin improvement. Gross margin recovery was led by a favourable product mix as EV product mix moved up to ~26%.

Sona BLW’s (SONA) Q2FY23 EBITDA margin came in at 25.2% (up 102bps QoQ) as the company clocked its all-time high quarterly revenue of ~Rs6.6bn despite the impact of geopolitical situation in EU and covid-led slowdown in China.

Strong order Book Market share Gains: SONACOMS net order book stands at Rs136bn (~9x FY21 sales) which includes EV segment of Rs79bn (59%) and Non-EV segment Rs57bn (41%). Net order book implies aggregate sales in the next 10 years from awarded programs which are either yet to start production or are yet to fully ramp up). Its Global market share in Differential Gears and Starter Motor grew from 5% to 6.4% and 3% in to 5% respectively during CY9MCY21. HOLD: SONACOMS has a reputed client credentials with highly profitable self-funded business model which warrants premium valuations. Its Sales and PAT are expected...