Sona BLW shares: Jefferies initiates coverage, expects auto ancillary stock to grow one-third in value

Sona BLW shares: Jefferies initiate coverage on Sona BLW Precision Forgings (SONACOMS) — a maker of auto parts — with a ‘buy’ rating and a target price of Rs 575 per share. The brokerage's target price suggests upside potential of around Rs 145 or 33 per cent in the stock compared with its closing price on Tuesday.

In other words, Jefferies expects Sona Comstar shares to grow one-third in value, citing the company's strong business outlook as well as order book. The brokerage is also positive on the company's strategy of expanding its component portfolio to address intensifying electrification.

Jefferies expects Sona BLW Precision Forgings' revenue to grow at a CAGR of 31 per cent over the four-year period ending March 2023, and its earnings per share (EPS) to expand at 40 per cent. Sona BLW's valuation appears to be rich at 38 times its estimated prive to earnings for the year ending March 2023, though it should be sustained, according to the brokerage.

Also Read: Blackstone exits Sona BLW Precision; stock gains – CLSA cuts target but bullish on growth

Analysts suspected profit booking in the Sona BLW Precision Forgings stock.

Private equity firm Blackstone's affiliate, Singapore VII Topco III, sold its entire 20.5 per cent stake in Sona BLW Precision for Rs 4,917 crore through the open market route. The buyers included the Monetary Authority of Singapore, the Government of Singapore, BNP Paribas Arbitrage, Fidelity Asian Values and Societe Generale.

Also Read: Should you buy, sell or hold HUL, Paytm, Bharti Airtel, Tata Motors, Sona BLW, other stocks now?

Gurugram-based Sona BLW Precision Forgings (Sona Comstar) is primarily engaged in the designing, manufacturing and supplying of highly engineered, mission-critical automotive systems and components to automotive original equipment manufacturers (OEMs).

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