Sona BLW Precision share price in focus after strong Q1 results. Here’s what brokerages say

Sona BLW Precision share price surged over 4% on Thursday's session following the release of the company's strong Q1 results. The Q1 results, according to experts, either met or exceeded the Street's projections. Sona BLW Precision share price today opened at ₹699.80 apiece on BSE, the stock touched an intraday high of ₹716.60, and an intraday low of ₹691.55. However, the stock started to slide down during the session.

Ruchit Jain, Lead Research Analyst at 5paisa, said that the Sona BLW Precision share price is in a short-term consolidation phase where support is seen around ₹655. On the higher side, resistance is seen in the range of ₹730–740.

On Wednesday, July 24, Sona BLW Precision Forgings Ltd, a manufacturer of auto components, announced a 26.7% YoY rise in net profit for the first quarter that concluded on June 30, 2024, coming in at ₹141.9 crore. Sona BLW Precision Forgings reported a net profit of ₹112 crore for the same period, according to a regulatory filing by the business. Compared to the same time in the previous fiscal year, when the business's revenue from operations was ₹731.4 crore, it increased by 21.8% to ₹891.2 crore.

Here's what brokerages say

Motilal Oswal Financial Services

The brokerage stated that the business's 1QFY25 operating performance met all expectations. Despite a challenging market, the company's strong revenue/PAT growth of around 22%–24% YoY is attributed to its expansion in the BEV segment and its efficient management of a sizable order book. Currently, the BEV category generates 33% of sales, up from around 29% in FY24.

“The company's strong performance is evident in its attractive valuations of ~65x/52x FY25E/FY26E EPS, reflecting its robust EV order book and superior earnings and return profile. However, given the demand uncertainties in its key markets and limited potential for a re-rating, we reiterate our Neutral rating with a target price of ₹620,” the brokerage said.

JM Financial

Sona BLW Precision Forgings' (Sona Comstar) revenue was 2% more than JMFe. EBITDAM remained consistent at 28.1%. Increased operating leverage and a favorable mix drove the YoY margin gain (+30bps). The management said that the market for light vehicles remained stable in most regions, with the exception of the EU. On the other hand, poor OHV demand (in the US and India) is anticipated to hinder the performance.

“Positive operating leverage is expected to support margins. Diversified revenue, increasing share of EVs/Hybrids and strong order book makes Sona Comstar one of the best plays in the EV space. We expect it to post a c.24% / 29% revenue / EPS CAGR over FY24-27E. Maintain BUY rating with Sept’25 TP of ₹760,” the brokerage said.

Nuvama Institutional Equities

Due to robust growth in the BEV market, the brokerage said that Q1FY25 revenue/EBITDA clocked 22%/23% YoY, slightly above its predictions. Compared to ₹22,600 crore in March 24, the order book grew to ₹23,300 crore in June 24, with additional orders for shafts, sensors, software, differential assemblies, and gears.

“The company remains a key beneficiary of electrification in both overseas and domestic markets. Furthermore, profitability is likely to be higher with 25% earnings CAGR, supported by scale benefits. Retain ‘BUY’ with a target price of ₹780 (unchanged),” said Nuvama in its report.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.