Sona BLW Precision shares rise after Q1; should buy, sell or hold?

Sona BLW shares are down over 25 percent since the beginning of the year.

Shares of Sona BLW Precision Forgings gained as much as 1.5 percent to Rs 450 in morning trade on August 5 after the company reported a 12.2 percent decline in net profit to Rs 124.7 crore in the first quarter of the current fiscal year.

The company reported that its total revenue from operations reduced 4.2 percent at Rs 854 crore in the quarter under review from Rs 893 crore in the year-ago period. The earnings before interest, taxes, depreciation and amortization (EBITDA) reduced 17.4 percent to Rs 206 crore in Q1FY26 from Rs 251 crore year-on-year (YoY), while the margin was reported at 24.1 percent from 28.1 percent YoY.

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After the earnings, CLSA has retained an outperform rating on Sona BLW with a target price of Rs 566 per share. This implies an upside potential of 28 percent from the last close. The company’s Q1FY26 EBITDA margin came in slightly below expectations, impacted by negative operating leverage and an unfavourable product mix. Revenues declined 5 percent year-on-year, mainly due to a 25 percent drop in Battery Electric Vehicle (BEV) revenue, led by a change in supply terms with a European EV client and lower volumes from a key EV customer. Additionally, supply constraints in rare-earth magnets affected traction motor production. The brokerage also flagged concerns around tariff-related uncertainties from the US.

Jefferies has a Buy rating on Sona BLW but has reduced its target price to Rs 515 per share. The company posted a weak Q1, with EBITDA down 19 percent year-on-year—largely in line with estimates—due to volume drops at a key OEM, rare-earth magnet shortages, and tariff-induced demand softness. While near-term earnings visibility remains limited, Jefferies pointed out that entry into China, benefits from the railway business acquisition, and alternate motor designs to mitigate rare-earth dependency could provide some cushion. It has cut FY26–28 EPS estimates by 13–19 percent.

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"We have received a large order from a North American OEM (original equipment manufacturer) to supply differential assemblies. This is our largest order win in the last two-and-a-half years. We believe this is likely to be one of the most significant and successful EV launches in many years," Sona Comstar MD and Group CEO Vivek Vikram Singh said.

The company has recently signed a term sheet with JNT to form a joint venture in China, he noted. This JV marks a significant step in the company's strategy to expand into the rapidly growing Asian markets, he added. "With a robust order book already in place, we expect operations to commence later this year," Singh said.

Sona BLW shares are down over 25 percent since the beginning of the year.

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