Acquisition of railway biz of Escorts Kubota, healthy Q2 lift Sona BLW 11%

The surge in Sona BLW share price came on the back of acquisition of the railway business division of Escorts Kubota Limited (EKL), coupled with a healthy Q2FY25 results

Sona BLW share price: Shares of Sona BLW Precision Forgings (Sona Comstar) were in demand on Thursday, October 24, 2025 as the scrip rallied up to 11.09 per cent to hit an intraday high of Rs 713.75 per share.

 

The surge in Sona BLW share price came on the back of acquisition of the railway business division of Escorts Kubota Limited (EKL), coupled with a healthy September quarter of financial year 2025 (Q2FY25) results.

 

In a statement, Sona BLW said that it has entered into an agreement with Escorts Kubota to acquire the Railway Equipment Division (RED) of Escorts Kubota, on a slump sale basis, for an enterprise value of Rs 1,600 crore, subject to the terms of the agreement. 

 

 

"We are delighted to step into the railways components sector with the signing of the agreement to acquire the Railway Equipment Division of EKL. The proposed acquisition of the Railway Equipment Division aligns with our vision statement as we expand into the broader mobility sector. Once completed, the ‘Railway Equipment Division’ acquisition will enhance our clean mobility product offerings by adding a market-leading railway components business," said Vivek Vikram Singh, MD & Group CEO of Sona Comstar.

 

Railway Equipment Division of Escorts Kubota is a leading supplier of critical components for Railways, such as brakes and suspension systems for various rolling stocks. It reported revenue of approximately Rs 950 crore and approximately Ebit of Rs 179 crore in FY24.

 

The proposed acquisition of the Railway division is expected to be earnings accretive for Sona Comstar right from the first year and offers significant growth opportunities, Sona BLW said.

 

“The railway industry presents long-term growth opportunities, and with the ‘Railway Equipment Division’ business, we see significant potential to broaden our product range by incorporating advanced technology and engineered products,” Singh added.

 

Furthermore, the acquisition of RED is subject to customary closing conditions, including the receipt of regulatory approvals.  

 

“Prima facie, we see this deal (acquisition of RED) as a strategic positive for Sona Comstar’s long-term growth owing to large and fast-growing addressable market (Railway capex has grown at 17 per cent CAGR over FY15-24 to Rs 2.6 trillion) and will help the company to further diversify its product / customer mix. This increases growth longevity for the company especially in the light of slowing global EV adoption,” said Ronak Mehta and Vivek Kumar of JM Financial in a note.

 

The acquisition comes at a trailing PE of about 11-12x as per JM Financial’s estimate, and is expected to be earnings per share (EPS) and return on capital employed (RoCE) accretive, Mehta and Kumar said.

 

Sona BLW Q2 results

 

Sona BLW’s net profit zoomed 15.7 per cent year-on-year (Y-o-Y) to Rs 143.6 crore in Q2FY25, from Rs 124.1 crore in Q2FY24. Its revenue surged a little over 17 per cent annually to Rs 922.2 crore in Q2FY25, from Rs 787.5 crore in Q2FY24. 

 

At the operating level, earnings before interest, tax, depreciation and amortisation (Ebitda) jumped 14.6 per cent annually to Rs 252.1 crore while its Ebitda margin squeezed marginally (60 basis points) to 27.3 per cent.

 

With respect to 2QFY25, analysts at JM Financial noted, revenue / Ebitda were 2-3 per cent above their estimates. EV business continued to drive revenue growth (+53 per cent Y-o-Y) and EV revenue share stood at 35 per cent during H1. 

 

Therefore, analysts said they expect it to post about 31 per cent / 35 per cent revenue / EPS CAGR over FY24-27E (including acquisition of RED). Hence, they maintained ‘Buy’ rating with March’26 target price of Rs 850 (DCF-based). 

 

Key risks, analysts at JM Financial believe, include slower adoption of EVs and inability to win new customers/orders. 

 

Meanwhile, international brokerage firm JP Morgan maintained its ‘Overweight’ rating but raised the target price to Rs 640 per share.

  About Sona BLW  Sona BLW Precision Forgings Limited, known as Sona Comstar, is a leading global mobility technology company established in 1995 and headquartered in Gurugram.

 

The company operates manufacturing and assembly facilities, research and development (R&D) centres, and engineering capability centres in India, the USA, Serbia, Mexico, and China. 

 

Sona Comstar specialises in designing, manufacturing, and supplying critical automotive systems and components to OEMs, with a strong focus on driveline and traction motor solutions for the burgeoning electric vehicle (EV) market. 

 

The company boasts advanced R&D, engineering, and technological expertise in precision forging, mechanical and electrical systems, mmWave radar sensors, and software development, serving a diverse range of geographies, products, vehicle segments, and customers.

 

The market capitalisation of Sona BLW is Rs 43,503.39 crore, according to BSE. The company falls under the BSE 200 category. 

 

At 11:55 AM, shares of Sona BLW were trading 9.30 per cent higher at Rs 702.20. In comparison, BSE Sensex was trading 0.05 per cent lower at 80,042.23 levels.