Neutral SONA BLW Precision Forging; target of Rs 610: Motilal Oswal

Neutral

Motilal Oswal's research report on SONA BLW Precision Forging

SONACOMS’ 3QFY24 results surpassed our estimates, led by better product mix and lower RM costs, resulting in an EBITDA margin of 29.3% (vs. est. 27.8%). Although the operational performance was healthy, we expect the margins to moderate in the future as RM costs and product mix normalize. The company’s focus on expanding in EVs continue with BEV contributing ~30% to the revenue (vs. 26%/27% in FY23/2QFY24). We largely maintain our FY24E/25E EPS.

Outlook

We believe the current valuations of ~64.6x/49x FY24/25E EPS factor in its strong EV order book as well as superior earnings and return profile. We reiterate our Neutral stance on the stock with a TP of INR610 (based on ~45x Dec’25E consol EPS).

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SONA BLW Precision Forging - 24012024 - moti