ICICI Securities research report on Sona BLW Precision Forgings
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. In Q2FY24, it won two new EV programmes from i) a North American OEM (new customer) for rotor-embedded differential sub-assemblies and ii) an existing India customer for traction motors for e3Ws.
Outlook
Post ~14% correction in the stock price over the last 3 months, we upgrade SONA to BUY from Add with a revised DCF-based TP of INR 598 (earlier: INR 630), implying ~44x FY25E EPS vs 42% earnings CAGR in FY23-25E. The change in TP is due to ~5% cut in revenue for FY24E/FY25E each to factor in lower e2W volumes (9-10% of SONA’s revenue) led by FAME subsidy reduction.
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