Neutral SONA BLW Precision Forging; target of Rs 580: Motilal Oswal

Motilal Oswal's research report on SONA BLW Precision Forging

SONA BLW (SONACOMS) reported 3QFY25 operational performance in line with our estimates, while PAT beat our estimate thanks to higher other income. The company continues to win new orders, especially in its core division, resulting in its ever increasing order backlog. The share of EVs was higher in the order book/revenue at ~76%/39% as of 3QFY25. As part of its product advancements strategy, the board has decided to invest USD4m in ClearMotion Inc., a leading software-defined chassis company. It gives SONACOMS access to new products such as proactive suspension.

Outlook

Given these headwinds, valuations at ~51x FY26E/43x FY27E consol. EPS appear expensive. Reiterate Neutral with a TP of INR580, premised on ~44x Dec’26E consol. EPS and assigning INR47 per share for the recently acquired railway business.