How will Sona BLW's JV with JNT unlock ₹1,670 crore TAM? Stock up 3%

Sona BLW Precision Forgings shares gained 3 per cent in trade after company signed a binding term sheet with Jinnaite Machinery (JNT) to establish a joint venture (JV) company in China

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Sona BLW Precision Forgings shares rose 3.4 per cent, logging an intraday high at ₹496.3 per share on BSE. At 12 PM, Sona BLW share price was trading 1.72 per cent higher at ₹258.8 per share on the BSE. In comparison, the BSE Sensex was up 0.36 per cent at 82,052.49. 

 

The company's market capitalisation stood at ₹30,339.98 crore. The 52-week high of the stock was at ₹767.8 per share, and the 52-week low of the stock was at ₹379.8 per share. 

Why were Sona BLW Precisions shares buzzing in trade?

The buying interest on the counter came after the company signed a binding term sheet with Jinnaite Machinery (JNT) to establish a joint venture (JV) company in China. 

 

According to the filing, the JV will manufacture and supply driveline systems and components to automotive original equipment manufacturers (OEMs) in China and globally. 

 

Sona Comstar will invest $12 million, while JNT will contribute $8 million in assets and business to the joint venture in the first phase. The JV is expected to commence operations in the second half of the current financial year, marking a significant milestone in Sona Comstar's expansion into the Chinese EV market. 

 

The driveline manufacturing operations in China align with the company's strategy to expand its presence in Asian markets, particularly in India, China, Japan, and South Korea, while also working to increase its market share further in North America and Europe, according to Sona BLW

 

Domestic brokerage JM Financial Institutional Securities believes this JV will represent a significant growth opportunity for Sona BLW as the company would not have entered this venture without a strong anchor customer (mostly BYD). 

 

Based on the brokerages estimates, the JV could unlock a total addressable market (TAM) of ₹1,670 crore (48 per cent of Sona’s FY25 revenue), with potential upside if the JV onboards other global and domestic EV players like Tesla in China. 

 

The brokerage has maintained a 'Buy' on the stock with a target of ₹630 per share. 

About Sona BLW 

Sona Comstar is a global supplier of driveline solutions for various automotive segments and is strategically expanding its presence in the faster-growing Asian markets. The company is the largest supplier of differential assemblies for battery electric vehicles (BEVs) in North America and ranks among the top suppliers in Europe. 

About Jinnaite Machinery Co

The company operates a world-class foundry utilising patented technology to manufacture complex castings and molds. JNT holds 63 patents and 36 proprietary technologies, and it is actively engaged in the formulation of Chinese national standards, having contributed to the development of five national standards. Its strong customer base in the automotive, off-highway, and railway sectors, including leading Chinese automotive OEMs, as well as those from North America, Europe, and Japan, further underscores its expertise and capabilities.