Buy Sona BLW Precision Forgings, target price Rs 587: Angel Broking

Angel Broking has buy call on Sona BLW Precision Forgings Ltd. with a target price of Rs 587. The current market price of Sona BLW Precision Forgings is Rs 495.15.

Time period given by analyst is one year when Sona BLW Precision Forgings Ltd. price can reach defined target.
Sona BLW Precision Forgings Ltd., incorporated in the year 1995, is a Small Cap company (having a market cap of Rs 28937.01 Crore) operating in Auto Ancillaries sector.


Financials
For the quarter ended 30-06-2021, the company reported a Consolidated Total Income of Rs 500.91 Crore. Company reported net profit after tax of Rs 82.23 Crore in latest quarter.

Investment Rationale
Sona BLW is one of India’s leading automotive technology companies that derives ~40% of its revenues from Battery Electric Vehicles (BEV) and Hybrid Vehicles. It supplies EV differential assemblies and gears, BSG systems and EV traction motors to global customers. ~75% of their income from sale of goods in FY21 came from end-use in the overseas markets . This global BEV segment has been fastest growing and is expected to maintain high growth rates which is positive for Sona BLW.The company’s capabilities have enabled them to gain market share across its products especially for products related to EV/BEV. They also have strong market share ranging from 55-90% for differential gears for PV, CV and tractor OEMs in India. Given the traction in the BEV/Hybrid Vehicle space, the brokerage believes that Sona Comstar will continue to command higher multiple which is justified by ~47% earnings CAGR over FY21-24E.

Promoter/FII Holdings
Promoters held 58.3 per cent stake in the company as of March 31, 2021, while FIIs held 4.5 per cent, DIIs 36.3 per cent and public and others 21.3 per cent.