Apr'25 View on Sona BLW Precision Forgings Ltd

Sona BLW Precision Forgings is an India-based automotive technology company. The company is engaged in designing, manufacturing and supplying engineered automotive systems and components such as differential assemblies, gears, conventional and micro-hybrid motors, BSG systems and EV Traction motors across all vehicle categories. The company develops mechanical and electrical hardware systems, components as well as base and application software solutions. Details about Q3 to help us know the Q4 outcome • Q3FY25 EBITDA was 2% below our modest estimates. • Revenue growth to remain subdued in near term; medium-term growth prospects remain strong. • Company has net order book of Rs23,200 cr; will be executed over next 10 years. • Battery EV mix improved to 36% in 9MFY25 versus 29% in FY24. • We expect earnings per share (EPS) to grow by 25.8% in FY26E & 19.7% in FY27E. • We value core business based on DCF /railway business at Rs40/share. Q3FY25 Earnings update: Positives: • BEV revenue grew 48% yoy growth and >60% yoy growth in traction motor business. • Adjusted PAT came in at Rs155 cr, 5% above estimates. Negatives: • EBITDA margin came in at 27% (-230 bps yoy), was 20 bps below our estimates. • Gross margin declined 320 bps yoy due to an inferior product mix.