Sona BLW hits new high; stock up 96% over issue price on healthy outlook

The stock has soared 20% in nine days after media report suggested that US electric vehicle maker Tesla is in talk with at least three Indian suppliers as part of its plan to enter the Indian market

Shares of Sona BLW Precision Forgings (Sona Comstar) hit a new high of Rs 570.75 after they rallied 5 per cent on the BSE in the intra-day trade on Thursday on healthy outlook. The stock of the auto parts & equipment company was trading at its highest level since its listing on June 24, 2021.

Sona Comstar had made a strong debut on the bourses when the stock had ended at Rs 362.85 -- a 25 per cent premium against its issue price of Rs 291 per share on the BSE on the listing day. Currently, the market price of the company has zoomed 96 per cent over its issue price.

Sona Comstar is one of the few companies globally, with the ability to design high power density electric vehicle (EV) systems handling high torque requirements with a lightweight design, while meeting stringent durability, performance and NVH specifications, enabling EV manufacturers to enhance the vehicle range, acceleration and the overall efficiency.

In the past nine trading days, the stock has gained 20 per cent after media report suggested that US electric vehicle maker Tesla is in talk with at least three Indian suppliers as part of its plan to enter the Indian market. On clarification of news report, Sona Comstar had said that the company is not engaged into any discussion with respect to supply of components to Tesla for its India plan.

As on June 30, 2021, the company’s net order book stood at Rs 14,000 crore, of which 57 per cent is from EV. The company has partnered with Israel's IRP Nexus Group for a unique joint development project to develop a magnet-less powertrain, manufacture it and market it globally.

Meanwhile, in April-June quarter (Q1FY22), Sona Comstar reported a strong 226 per cent year-on-year (YoY) revenue growth of Rs 500.7 crore, due to 565 per cent growth in EV revenue and lockdown impact in the comparable quarter last year. Ebitda (earnings before interest, taxes, depreciation, and amortization) margin also improved YoY from 19 per cent to 27.7 per cent in Q1FY22 due to better product mix and operating leverage. On a sequential basis, Ebitda margins improved by 170 basis points (bp) from 26 per cent in Q4FY21.

According to the company, growth in EV segment and global market share would be the cornerstones of its growth strategy. "Recovery in the global automotive market after 3 years of contraction should act as a tailwind. Electrification is set to gain further traction and projections by renowned industry publications indicate acceleration in the customer preference for electrification due to multiple factors such as improved infrastructure, reduced total cost of ownership and fiscal incentives among others over the coming years," it added.

At 01:42 pm, the stock was up 1.5 per cent at Rs 553 on the BSE, as compared to a 0.04 per cent fall in the S&P BSE Sensex. A combined 3.84 million equity shares had changed hands on the counter on the NSE and BSE till the time of writing of this report.