Sona BLW becomes first auto ancillary company to receive certification under the PLI scheme; stock jumps 4%

Shares of Sona BLW Precision Forgings rose over 4 per cent on Friday (February 23), climbing for the second straight session.

The stock rallied after the company received certification for one of its products, hub wheel drive motors for electric two-wheelers, under the production-linked incentive (“PLI”) scheme for the automobile and auto component industry in India.

As of 10:03 a.m., shares of Sona BLW Precision Forgings traded 1.92 per cent, or Rs 11.75, higher at Rs 625 apiece. The market capitalisation of the company at around the same time stood at Rs 36,679 crore.

"the company has received certification for one of its products, i.e., hub wheel drive motors for electric two-wheelers, under the Production-Linked Incentive (“PLI”) Scheme for Automobile and Auto Component Industry in India (“PLI-Auto”) from the Ministry of Heavy Industries," the filing read.

Further, Sona Comstar became one of India's leading manufacturers of EV traction motors. As per Zee Business research, traction motors contributed a 5 per cent share of H1FY24 earnings, and as per the Q3 concall, traction motors is the fastest growing product segment for the company. 

Under the Auto PLI scheme, the company had given seven applications for different products.

Sona BLW bets big on electric vehicles (EV)

The company's net order book at the end of Q3 FY24 stood at Rs 24,000 crore, and EV accounted for 79 per cent of it. As per Sona BLW's management, EV's share of revenue will increase from 28 per cent to 45 per cent - 50 per cent by FY26. 

Here's what brokerages recommend on Sona BLW

CLSA maintained an 'outperform' rating on the stock and raised the target to Rs 642 from Rs 578 apiece. Similarly, Jefferies continued with 'buy' and gave a target of Rs 750 apiece.

Meanwhile, Citi also reiterated 'buy' on the counter and cut the target price to Rs 665 from Rs 670 earlier.

Sona BLW Precision Forgings shares: Past performance

In a year, Sona BLW Precision Forgings shares have gained over 36 per cent against the Nifty50's rise of over 26 per cent.

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