Sona BLW Precision lags in Q1: Stay invested or exit? Analysts answer

Sona BLW Precision share price: Sona BLW Precision Forgings (Sona Comstar) shares were in focus as the scrip rose up to 1.64 per cent to an intraday high of ₹450.10 on Tuesday, August 5, 2025, despite reporting a weak set of numbers for the quarter ended June 2025 (Q1FY26).   Around 9:40 AM, Sona BLW share price was trading 0.52 per cent higher at ₹445.10. In compariosn, BSE Sensex was trading 0.37 per cent lower at 80,722.02 levels.  However, despite the short-term pressure, most brokerages remain constructive on the long-term outlook, citing a strong order book, strategic expansion into new markets, and promising electrification-led growth.

 

Sona BLW Q1FY26 results

 

Sona BLW’s consolidated revenue for Q1FY26 came in at ₹850.9 crore, marking a 5 per cent year-on-year (Y-o-Y) decline. This was primarily led by weakness in the Battery Electric Vehicle (BEV) segment, where revenue plunged 25 per cent Y-o-Y to ₹210.6 crore. Despite this, BEV contributed 28 per cent of the overall revenue in the quarter, reflecting the company’s continued focus on electrification.

 

Operating profitability was also under pressure. The company reported Ebitda of ₹202.5  crore, down 19 per cent Y-o-Y, with Ebitda margin shrinking to 23.8 per cent. Net profit (PAT) declined 12 per cent Y-o-Y to ₹124.7 crore, translating to a net profit margin of 14.3 per cent.

 

Electrification and order book growth

 

Sona BLW’s growth strategy continues to hinge on electrification, and it remains a key player in the EV ecosystem. In Q1FY26, the company added two new EV programmes, taking the total awarded programs to 60 across 32 customers.

 

Notably, 75 per cent of its net order book – worth ₹26,200 crore as of June 30, 2025 – is from EV programmes. This strong and growing order book provides visibility for future revenue growth.

 

Strategic developments in Q1FY26

 

The company also took key strategic steps during the quarter. On July 20, 2025, Sona Comstar signed a binding term sheet with China-based Jinnaite Machinery Co., Ltd. (JNT) to establish a joint venture (JV) focused on manufacturing and supplying driveline systems to automotive OEMs in China and globally. Sona will invest $12 million in the first phase, while JNT will contribute $8 million in assets and business. The JV is expected to begin operations in the second half of FY26, strengthening Sona’s footprint in the growing Chinese EV market.

 

Additionally, Sona secured two major new orders. One from a North American OEM for differential assemblies for electric passenger vehicles, adding ₹1,550 crore to the order book. Production is scheduled to commence in Q3FY28.

 

Another from an Indian OEM for supplying drive motors for electric three-wheelers, adding ₹260 crore on to the order book, with production set to start in Q4FY26.

 

The company also completed the acquisition of the Railway Equipment Division from Escorts Kubota on June 1, 2025. The business has been fully integrated, and its financials have been consolidated from that date.

 

Brokerage views: Still bullish long-term

 

Despite the weak quarterly numbers, brokerages remain optimistic about Sona BLW’s long-term prospects.

 

Nuvama said the Q1FY26 revenue and Ebitda were broadly in line with expectations, though the adverse mix and industry slowdown led to an earnings cut. It reduced FY26E/FY27E Ebitda estimates by 4 per cent/6 per cent, respectively. However, it maintained a ‘Buy’ rating with a target price of ₹560, based on 45x/25x Sep-27E EPS for the core and railway businesses.

 

Nuvama expects revenue and Ebitda to grow at a CAGR of 17 per cent and 14 per cent, respectively, over FY25–28, aided by a strong order book and the recent railway business acquisition. The brokerage continues to see Sona as a major beneficiary of the electrification theme, both in domestic and global markets.

 

According to reports, CLSA maintained an ‘Outperform’ rating but trimmed the target price to ₹566 from ₹582. It described the quarter as “tough, but largely in line with expectations.” The firm noted that most of the headwinds were concentrated in Q1 and expects conditions to gradually improve in the upcoming quarters. 

JM Financial, meanwhile, noted that the Q1FY26 Ebitda margin of 23.8 per cent was 30bps below its estimate, impacted by negative operating leverage and an adverse product mix – primarily due to the inclusion of the lower-margin (18 per cent) railway business from June 2025. 

 

The EV business growth was affected by multiple headwinds including a change in revenue recognition with a European EV customer (delivery vs ex-works), demand slowdown at a key customer, rare-earth magnet supply constraints, and US tariff uncertainty delaying OEM procurement.

 

Despite these challenges, JM highlighted order wins worth ₹1,550 crore from a North American customer and ₹260 crore from an Indian OEM, along with the JV with China’s JNT, which offers a total addressable market (TAM) of ₹1,670 crore (~48 per cent of FY25 revenue). It reduced margin estimates by 160bps/70bps in FY26E/FY27E to 24.6 per cent/26 per cent, and maintained a ‘Buy’ rating with a target price of ₹580 (35x FY27E EPS).

 

That said, Sona BLW’s Q1FY26 performance reflected short-term headwinds, particularly in the BEV segment. However, the long-term growth drivers remain intact, supported by a robust EV-focused order book, strategic global expansion, and new client wins.

 

Brokerages continue to back the stock, suggesting that investors with a medium- to long-term view may consider holding or accumulating the stock, especially on any dips.