Sona is a major beneficiary of the growing penetration of BLW Precision Forgings Ltd., which provides components for electrified and non-electrified powertrain segments. electric vehicles (EV).
For perspective, in the March quarter, in India, the share of EV two-wheelers increased to 3.3% from 1.8% in Q3FY22. Analysts at Kotak Institutional Equities expect the EV mix in the domestic two-wheeler segment to reach 50% by FY2030, driven by declining upfront costs.
By the end of FY22, EV orders contributed 62% to Sona BLW’s healthy order book of Rs 18,600 crore. Currently, the company serves 7 of the top 10 global passenger vehicle manufacturers.
In the Electric Passenger Vehicle segment, it has 11 EV programs from seven unique customers, and in Electric Two-Wheeler/Three-Wheeler it has 7 EV programs from six unique customers.
While the demand environment remains strong, supply chain concerns remain. Analysts at Nomura Financial Advisory & Securities (India) hosted Sona BLW at Nomura Investment Forum 2022, where the management of auto component makers said that the supply-demand mismatch due to semiconductor shortage will normalize by early 2023, resulting in Better would be H2FY23. ,
With the easing of Covid-led restrictions in China, activity in the country is gaining momentum. But its Europe business remains weak and management expects that to continue for some time.
“Adding a full range of new products and segments like Motors, Spool Gears, PHEV Starter Motors etc., Expanding capabilities with focus on becoming a leading solution provider in EVs across all segments (Two Wheelers, Passenger Vehicles, Commercial Vehicles) etc.),” Nomura analysts said in a report on June 7. PHEV is short for Plug-in Hybrid Electric Vehicle.
Sona BLW currently holds 15-20% market share in the electric two-wheeler segment. However, with increasing competitive intensity, the company expects its market share to come down to 10-15%. On the margin front, the company’s medium-term target is in the range of 26-27%.
Nomura analysts have a target price of Rs 770 per share, based on a 50 times FY24 price-to-earnings ratio. The stock is currently trading at Rs 588 on NSE.