Sona BLW remains a Buy for Citi with lower target, global demand may be at risk

Sona BLW Shares in focus after Citi maintains 'Buy' with revised target price

Shares of Sona BLW Precision Forgings are higher on March 18 after Citi reaffirmed 'Buy' rating, but lowered target price citing risk of weaker global demand as well as potential delays in existing orders, also reducing the multiple assigned to the company.

The stocks gained close to a percent in early trade, reaching Rs 489.25 as of 10:00 am.

Citi reaffirmed its 'Buy' rating on Sona BLW Precision but revised its target price lower to Rs 570 per share from its previous estimate. The note highlighted Sona BLW’s strong order book as a key differentiator from other Indian B2B auto parts manufacturers, supporting a positive long-term outlook. However, Citi also cited risks that could impact future growth, including weaker global demand and potential delays in existing orders.

This revised outlook comes at a time when the broader industry is seeing supply chain challenges and fluctuating demand for auto component makers.

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Citi has also trimmed its earnings estimates and reduced stock’s target multiple to 42x from 45x, reflecting a more cautious approach. Despite the concerns, the brokerage continues to back Sona BLW on its order book strength and product diversification.

Out of the 18 analysts covering the stock, 15 have a 'Buy' rating and other three have rated the stock as a 'Sell'. JM Financial and Systematix Group have set the highest target on the Sona BLW at Rs 725. Citi and Avendus Spark have set lowest target price of Rs 570.