In the era of global electrification, Sona can prove to be a beneficiary of BLW. The company’s order book continues to show strength.
Best Auto Stocks to Buy: Although the return chart of the IPO market has weakened in the ups and downs of the stock market, some of the stocks listed in the last 1 year have proved to be blockbusters for the investors. In these, the share of Sona BLW, an auto parts maker, is also included. The company’s stock has given a return of about 96 percent compared to the issue price. Brokerage house JM Financial is bullish on the outlook of the stock and has given a target of Rs 750 while recommending investment in it. That is, from the current price of Rs 555, the stock can get 35 percent more return.
Money has doubled in 1 year
The IPO of auto parts maker Sona BLW i.e. Sona Comstar was open from June 14 to June 16 and the stock was listed on the stock market on June 24, 2021. The issue price under the IPO was Rs 291, while its listing was done at Rs 302. On the day of listing, it closed at Rs 362.85 with a premium of 25 per cent. Whereas on Thursday, June 16, 2022, the stock closed at a price of Rs 570. That is, it has got a return of about 96 percent compared to the issue price. Well the 1-year high for the stock is Rs.840.
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What will the benefit of the company
Brokerage house JM Financial says that in the era of global electrification in the auto sector, Sona can prove to be a beneficiary of BLW. The company’s order book continues to show strength. As of March 2022, the order book of the company was 18600 crores. Due to this, strong growth is expected in the company going forward. Margins may remain under pressure in near term due to RM cost pressure, but it is expected to improve from 2HFY23. It will also get the benefit of softening of commodity prices going forward. PLI incentive is also a positive factor.
Expected better growth in revenue and margins
The brokerage house estimates that the company’s revenue may grow at a CAGR of 39 per cent during FY22-24e. EBITDA margin can be 26.8 percent and 30.4 percent during this period. The stock is currently trading at 45x FY24e EPS and has strong growth potential. However, rapid global changes in the cyclic and automotive sectors, delay in adoption of EVs and delay in securing new product orders are also some of the risk factors.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
