Equity Research Report - SONA BLW PRECISION FORGINGS LTD

Summary

To become the world’s most respected and valuable auto technology company for our customers, employees and shareholders.

Company Overview:

• Sona BLW Precision Forgings Ltd manufactures and sells systems and components for the automotive enterprise in India and the world over.
• The corporation offers traction automobiles, controllers, distinctive bevel gears, specific assemblies, controllers, pressure cars, hub wheel vehicles, drive cars, axles, starter motors, belt starter generators, alternators, reverse idlers, portal axle gears, couplings/sleeves, gear container gears, traditional and micro-hybrid starter, BSG systems, EV traction cars, and motor control devices.
• Its products are utilized in passenger and commercial cars, off-highway vehicles, electric powered motors, electric mild business cars, and electric powered two and three wheelers.
• The company was previously known as Sona Okegawa Precision Forgings Ltd. and changed its name to Sona BLW Precision Forgings Ltd in 2013.
• The enterprise incorporated in 1995 and is based in Gurugram, India.  

Key Statistics:

Market Cap: Rs. 27757 Cr.

Current Price: Rs. 475/-

52W High: Rs. 839.9/-

Stock P/E: 78.1

Book Value: Rs. 35.4/-

Dividend Yield: 0.32%

P/B: 13.4

Face Value: Rs.10/-

52W Low: Rs. 468.6/-

Source : www.sharescart.com 

Shareholding Pattern (%):

Source: www.sharescart.com

Revenue Mix by Geography: Q1FY23(%)

Source: Company's Earnings Presentation 

Peer Comparison:

Source: www.sharescart.com 

Growth Drivers:

• We continue to grow despite the persistent challenges faced by the automotive sector in the last two years.
• Sizeable and Increasing Presence in EVs. 3 significant EV program wins in Q1 to drive diversified EV growth. 36 EV programs across 231 different customers.

• With new wins of Rs. 28 billion our net order book1 grows to Rs. 205 billion (9.6x FY22 revenue).
• Diversified Revenue Mix – By Powertrain Battery EV increasing as a % of our revenue continues to be our dominant and secular theme Our pure ICE dependence continues to reduce steadily going from 25% in FY21 to 17% in Q1 FY23.
• We have largely contained margin impact amidst unprecedented RM inflation during the last year, through growth, pass through and other measures.
• Established Global Presence to Serve Customers Locally.
• Revenue share from BEV has grown 22x over 4 years, with absolute BEV revenue growth at 37x.

Source: Company's Earnings Presentation

Financial Snapshot :

Balance Sheet ( Rs. in Crores):

Profit and Loss Account (Rs. in Crores):

Cash Flow Statement (Rs.in Crores):

Source: www.sharescart.com 

VALUATIONS:

On the basis of Discount Cash Flow Valuation Method, we

are recommending ‘Buy’ for the stock. Since the stock

offers good opportunity, we initiate a ‘BUY’ signal on the

stock with 12-month price target of Rs 559/- share an

upside of 17.68 % from current levels.