This post on Sona BLW Precision Forgings IPO attempts to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Sona BLW Precision Forgings IPO or not.
Related Posts : Sona BLW Precision Forgings IPO Review
Sona BLW Precision Forgings IPO: Grey Market Premium etc.
- 15-06-21 GMP Rs. 6 (few deals)
Consolidated Brokerage Views on Sona BLW Precision Forgings IPO
Angel Broking :”Sona Comstar is present in the right areas and can be a major beneficiary of shift in focus of Global OEM’s towards EVs over the next decade. As per industry reports, Sona Comstar is among handful of companies in the world with strong motor and driveline capabilities. We believe that the company can maintain strong growth rates from its current base given higher salience of revenues from BEVs vs. industry. Ramp-up of business by select Global OEMs with EV offerings provides evidence while increasing avg. realization per vehicle (ICE vs. BEV) would drive top-line growth. The upper end of ` 291 implies FY21 P/E of ~75.2xwhich is in line with other Indian Auto Component companies that have lower top-line growth, margins and return ratios vs. Sona Comstar. Hence, we recommend “SUBSCRIBE” on the Issue.”
Capital Market : ” Score 51/100 ; Looking into the 3 year pro-forma financials of the company that is more relevant and comparable, the sales for FY21 was higher by 28% to R 1566.30 crore. The increase was due to ramp-up of sales volume for some of the new contracts and growth in sales in the Indian tractor market. With OPM expand by 150 bps to 28.2%, the operating profit was higher by 36% to R 441.02 crore. Consolidated EPS for FY2021 at upper price band stood at Rs 3.9 and that works out to a PE of 74.6 times. In comparison Igarashi Motors that is into electric motors including BLDC motors for automobiles quotes at a PE of 57.9 times. However, Bosch, the auto component major with large diverse products, quotes at 97.4 times of its FY2021 consolidated EPS. Similarly Motherson Sumi Systems quotes at a PE of 72.3 times of its FY21 consolidated EPS.”
Choice Broking: “At higher price band of Rs. 291, Sona BLW is demanding a TTM P/E multiple of 78.9x, which is at premium to the peeraverage of 60.3x. However, if we compare with EV focused global peer, it is at discount. Thus considering the growth potential in the EV segment and the company’s product portfolio spanning over all types of electrified power trains, we assign “Subscribe for Long Term” rating for the issue.”
HEM Securities: “On the financial performance front, company has posted financial performance which is almost in line with the peers or slightly better than that during last couple of years. However on valuation part, pricing seems to be on higher side on the basis of current financials. Hence looking after all aspects we recommend to “ Subscribe” the issue.”
ICICI Direct: “Sona Comstar provides an exciting play on electrification and possesses healthy financial strength (around 28 percent margins, around 20 percent RoCE-return on capital employed) but valuations proposed are rich (around 74x P/E on FY21 basis). Nevertheless, we believe the company offers a good investment case on the back of strong growth prospects,”
LKP Finance: “Despite its rich valuations, considering its visibility of topline growth, competitive edge, superior profitability as compared to peers, prudent cost management, return ratios, wide clientele spread across the globe, sound R&D base and technological progress, we recommend investors to SUBSCRIBE to this IPO of Sona Comstar for Long-Term”
Motilal Oswal: “We like SBPFL given its presence in fast growing global EV market, diversified portfolio across categories and robust financials. The issue is valued at 74.1x FY21 P/E on post issue basis. Though the valuation appears fully priced in, given its thrust in fast evolving EV space both in India and globally, market would like to give premium to such emerging growth story. Hence, we recommend Subscribe for Long Term.”
Nirmal Bang : “There is no direct comparable peer to SBPF and thus we compare it with prominent Indian auto ancillaries as well as global auto ancillaries supplying certain EV parts. We observe that SBPF’s margins and return ratios are well above peers. Considering these metrics along with the counter-cyclical nature of business owing to rising share of EV revenues (and scarcity premium due to lack of available EV plays in India), we expect the company to sustain its relatively higher valuations against peers. We recommend subscribing to the issue from a long term perspective.”
SMC: “Score 2.5/5 ; The company is a global player in critical auto components with a thrust on the EV segment. Despite growth in the top line, it suffered a setback in the bottom line for FY21. According to management, it suffered a setback in the bottom line for FY21 due to higher provisioning for depreciation, finance cost and rise in other costs of raw materials and other higher expenses due to pandemic. The auto sector as a whole has suffered a severe setback. On the flip side, considering the prospects of the company that are associated with the progress in the EV segment, the company would see good growth in a long run. Thus a long term investor may opt the issue.”
SP Tulsiyan Website: “Our short term view on the sector remains cautious, as FY22 profitability may be impacted due to sharp rise in commodity prices. In this backdrop, aggressive issue pricing factors in all the positives, without leaving much for near term upside. Hence, we recommend skipping the IPO. “
Ventura Securities: “At the higher price band of Rs. 291per share, SBPF is valued at 20.6x its FY24 net earnings. We recommend a SUBSCRIBE for long term investing”
MORE WILL BE ADDED AS THEY BECOME AVAILABLE
Standard disclaimer: Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above information is collated from various online sources and is for educational purpose only. Please visit individual brokerage sites to read the actual reports. Please do not make your investment decisions based on this info as it is not complete and exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.