Buy Sona BLW Precision Forgings; target of Rs 640: LKP Research

LKP Research is bullish on Sona BLW Precision Forgings has recommended buy rating on the stock with a target price of Rs 640 in its research report dated July 28, 2023.

Broker Research

July 31, 2023 / 13:14 IST

Buy

LKP Research's research report on Sona BLW Precision Forgings

Sona BLW Precision Forgings Ltd (Sona) posted a robust set of numbers in Q1 led by healthy growth at both topline and bottomline. Revenues grew by 24% and dropped a bit by 2% qoq. The growth came on the back of all its businesses except Traction Motors which bore the brunt of withdrawal of FAME-II subsidy on EV 2Ws in India. All other businesses and geographies, mainly North America and Europe performed well. EBITDA at ₹2.0bn was up 47% yoy and 1.2% qoq on better product mix and higher operating leverage. EBITDA margin was 27.8%, up 420bps yoy and 80bps qoq; better gross margin was partially negated by higher operating expenses. Adj PAT was ₹1.15bn, up 52% yoy but down 7% qoq, on higher depreciation and tax rate.

Outlook

We maintain BUY with a raised target price of ₹640 (valued at 45x FY25E earnings of ₹14.21)

For all recommendations report, click here