Company Overview: This company is an India-based automotive technology company which is engaged in designing, manufacturing and supplying engineered automotive. The product portfolio of the company includes components such as Differential assemblies, Gears, conventional and micro-hybrid motors, BSG systems and EV Traction motors across all vehicle categories. The company aslo develops mechanical and electrical hardware systems, components as well as base and application software solutions. The 79 % order Book of this company is from EVs. The company name is Sona BLW Precision Forgings also known as Sona Comstar (SONACOMS), let us go in depth:
Price Analysis: At the time of writing this article the stock is trading at a price of Rs 637, The stock has made a low of around Rs 400 (Dec22-Mar23) after touching all time high of Rs 833 in Dec 21. The stock has now breached the major resistance zone of 579 and now is trading above that price. The stock has given net returns of 118% since its listing in Jun 21. Let’s have a look the current price chart:
F24 Financial Highlights:
â–ºYoY Revenue growth: 19%
â–ºYoY EBIDTA growth: 30%
â–ºYoY PAT growth: 31%
Q4 Financial Highlights:
â–ºQoQ revenue growth: 19%
â–ºQoQ EBIDTA growth: 23%
â–ºQoQ PAT growth: 24%
Key metrics: Let’s have a look at the main key metrics of the company:
|
Current Price |
Rs 638 |
|
Market Cap |
Rs 37,395 Cr |
|
PE |
76.1 |
|
PEG |
2.04 |
|
Debt to Equity |
0.15 |
|
Operating Profit Margin |
28.5% |
|
Book Value |
Rs 43.9 |
|
Promoter Shareholding |
29.7% |
|
DII Holding |
28.8% |
|
FII Holding |
32.9% |
Positives:
â–ºROE of 28.5% in last FY.
â–ºROCE of 31% in last FY.
â–ºEPS increased from 6.63(Mar 23) to 8.26 (Mar 24).
â–ºIncreasing revenue from BEVs (Battery Electric Vehicles) increasing
every year. Let’s have a look at the trend from FY19-FY24:
â–ºGlobal market share for Differential Gears increased from 4.9% in FY-19 to 8.1% in FY23.
â–ºGlobal market share for Starter Motors increased from 2.5% in FY-19 to 4.2% in FY23.
â–ºFocus on Research and Development: The company has informed in the latest (May 24) investor presentation that they will be allocating the budget in way that 70% will be reserved for existing product areas and adjacencies, 20% will go in new areas like Semiconductors, 10% for moon shots with low success probability.
The focus areas in R&D will be exploring chip design, signal processing and software development. The company is also increasing budget allocation for R&D at NOVELIC in Serbia.
Negatives:
â–ºNo significant negative for the company.
Business Strategy for future:
â–ºDecreasing dependence on Internal Combustion Engines (normal petrol/ diesel engines), which was 25% in FY21 to only 10% in FY24.
â–ºFocus on diversification and new product development.
â–ºIncreasing spending on R&D by over 100 basis points in FY25.
â–ºTurning Serbia based Novelic business from engineering services to product and Semiconductor Chip Design.
â–ºAdding new products to technology roadmap like Steering Bevel Gear Box, robotic gears, lightweight differential assemblies, etc.
Future Prospects: The company has doubled most of the key metrics such as Revenue, PAT, EBITDA, Net Order Book, Global Market Share, Product portfolio etc., from the financial performance of the company supported by tailwinds in the EV sector the company seems poised to outperform markets in general. Let’s have a look:
The Multibagger takeaway:
Sona BLW Precision Forgings Ltd has stated a vision to become one of the World’s most Respected and Valuable Mobility Technology companies for our Customers, Employees & Shareholders and when we study the performance of the company, it seems on right track. Companies like Sona BLW presents the opportunity to investors to participate in the EV growth sector. Being a market leader in their segment companies like this are the opportunity which must be grabbed to create the long-term wealth.
**The article is based on the various documents submitted by the company with the stock exchange and data available in public domain.
Disclaimer:
We are not a SEBI registered analyst, IndianMultibaggers will not be responsible for any loss in future. Please do your own research and consult your financial advisor before taking any investment decision. The prices and data may vary according to the market forces at the time of reading this article.