Nuvama lifts Sona BLW's target price on strong railway, EV motor growth

Nuvama expects Sona BLW's revenue and Ebitda to expand at a CAGR of 20 per cent and 17 per cent, respectively, over FY25-28E

Nuvama Institutional Equities reiterated its ‘Buy’ rating on Sona BLW Precision Forgings stock, raising its target price to ₹570 from ₹550 earlier, based on 45x/25x September 2027E earnings per share (EPS) for its core and railway businesses. The brokerage sees a multi-year growth trajectory for the company and has raised its FY27E/FY28E Earnings before interest, tax, depreciation and amortisation (Ebitda) estimates by 2–9 per cent, factoring in higher growth in Railways and traction motors. 

 

The brokerage expects revenue and Ebitda to expand at a compound annual growth rate (CAGR) of 20 per cent and 17 per cent, respectively, over FY25–28E, driven by strong execution across Motors, Railways and Driveline segments.

Double-digit growth visibility over FY25–28E

Nuvama highlights that Sona BLW is poised for robust double-digit growth over FY25–28E, underpinned by the Railways buyout and a sizeable order book of ₹23,600 crore. The company is also likely to secure new order wins over the next 12 months, following the bankruptcy of three European competitors—Winning BLW, Neapco Europe and AIMS. This development has led to a surge in enquiries for Sona's products, with order wins expected over the next 12 months and production likely to commence in 2028. The new opportunity size is estimated at ₹2,500–3,000 crore.

 

Within traction motors, new programmes with two-wheeler and three-wheeler OEMs are expected to drive robust growth over the next three years. The company is engaged in 62 EV programmes across 32 customers, with EVs constituting 70 per cent of its order book.  ALSO READ | Hero MotoCorp accelerates on EV surge, rural push, says Nirmal Bang; 'Buy'

Sizeable order book of ₹23,600 crore

Sona's order book stood at ₹23,600 crore as of September 2025, compared with ₹26,200 crore as of June 2025. The company has prudently removed ₹3,600 crore worth of orders from its order book due to the commencement of orders and low visibility of execution. Despite this, the order book remains robust, with electric vehicles (EVs) accounting for 70 per cent of the total. Sona is engaged in 62 EV programmes across 32 customers, positioning it well to capitalise on the global shift towards electric mobility.

Railways division set for strong growth

The railway division accounted for over 20 per cent of total revenue in Q2FY26 and is expected to be a key growth driver going forward. The ₹23,600 crore order book includes ₹1,300 crore worth of railway orders, to be executed mainly over the next 12 months. Current offerings include braking systems, dampers and couplers, with new products under development in areas such as brakes, couplers, air springs, electric panels and HVAC systems.

 

Nuvama expects railway revenue to grow from ₹800 crore in FY26E (accounting for ten months' revenue) to ₹1,500 crore in FY28E, with the division's share in overall revenue rising to 24 per cent by FY28E. The company is also looking for opportunities to improve the cash conversion cycle of this division, which should further enhance profitability. ALSO READ | Telecom and energy stocks stop November from ending on a flat note

Core business retains strong growth potential

Within the core business, Nuvama expects strong growth driven by ramp-up of order execution for traction motors revenue for domestic electric two-wheeler and three-wheeler segments, differential assembly and gears for US and Indian OEMs, and suspension motors for Chinese and European OEMs. Over the medium to long term, the company also expects revenue contribution from emerging areas such as humanoids, eVTOL (electric vertical take-off and landing) and AMRs (autonomous mobile robots).

 

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