Sona BLW rallies 13% in 3 days on positive outlook; hits 23 month high

With five new Battery Electric Vehicles (BEV) program wins, the net order book of the company's order book rose to record levels of Rs 24,000 crore in Q3FY24 from Rs 21,500 crore in Q2FY24

Shares of Sona BLW Precision Forgings (Sona Comstar) hit a 23-month high of Rs 695 as they rallied 4.4 per cent on the BSE in Tuesday’s intraday trade amid heavy volumes on positive outlook. In the past three days, the stock of the auto ancillary company has surged 13 per cent. It hit its highest level since March 2022. Besides, it had hit a record high of Rs 839.90 on December 14, 2021.

The stock of Sona Comstar ended 3.38 per cent higher at Rs 687.75 as compared to 0.42 per cent rise in the S&P BSE Sensex. The average trading volume on the counter jumped over four-times today with a combined 4.66 million shares, representing 0.8 per cent of total equity of the company, having changed hands on the NSE and BSE.

Sona Comstar is a leading mobility technology company providing mission-critical systems and components for electrified and non-electrified powertrain segments. The company primarily designs, manufactures, and supplies highly engineered, mission-critical automotive systems and components to automotive OEMs. Sona Comstar is a leading supplier to the fast-growing global Electric Vehicle (EV) market.

With five new Battery Electric Vehicles (BEV) program wins, the net order book of the company has increased to reocrd levels of Rs 24,000 crore in the December quarter (Q3FY24) from Rs 21,500 crore as of March 31, 2023 (Q2FY24).

Sona Comstar's earnings before interest, tax, depreciation, and amortization (Ebitda) have been growing consistently. In the first nine months (April to December) of fiscal 2023-24 (9MFY24), the consolidated Ebitda was RS 655.1 crore (9MFY23: Rs 475.2 crore, FY23: Rs 675.2 crore), mainly driven by healthy revenue growth, a better product mix and improving operating leverage.

Rating agency India Ratings and Research (Ind-Ra) expects the consolidated Ebitda to continue to increase over FY24-FY25 on the back of healthy volume traction in EV-related products, along with the ramping up of new assembly lines, resulting in improved cost efficiencies.

"The consolidated Ebitda margins have remained resilient over FY19-9MFY24 ranging between 24 per cent and 30 per cent on the back of Sona Comstar’s strong market leadership position, cost controls and products specialisation. The margins grew sequentially on a quarter-on-quarter basis from Q1FY23-Q3FY24 on the back of the easing raw material prices coupled with better operating leverage and improved operational efficiencies. The margins were also aided by an increased contribution from new product launches and higher-margin products," Ind-Ra said in its rationale.

Ind-Ra expects the consolidated revenue to improve 15 per cent-17 per cent year-on-year in FY24 and FY25 on the back of new programmes across product segments such as EV traction motors, gears and differential assemblies. The growth will also be supported by customer additions as well as Sona Comstar's strong order book-backed capacity expansion for assembly lines, the rating agency said.