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* Sona BLW Precision Forgings Limited reported consolidated revenue of ? 6,573.9 million, a growth of 12.2% YoY. The BEV segment revenue grew 6% YoY while Non-BEV Revenue recorded saw a strong growth of 14% YoY. During the quarter the company saw ramp up of some new programs which were launched last year which contributed to revenue growth.

* The company reported EBITDA of ? 1,657.2 million in 2QFY23 as against ? 1,544.1 million in 2QFY22, a growth of 7.3% YoY. EBITDA Margins for 2QFY23 stood at ~25.2%, down ~115 basis points YoY. The quarter saw EBITDA margin coming to its normal range of 25-27%. Raw material prices have started cooling but not much so pressure on margins from input side is not completed alleviated. YoY lower margin was on account of arithmetic effect of material prices increase despite material cost passed. The profit after tax (PAT) for 2QFY23 came in at ? 925.5 million as against ? 882.3 million during 2QFY22 up by 4.9% YoY. PAT margin stood at 14.1%.

* The company have diversified Revenue mix with share of BEV increasing from 2% in FY20 to 25% in 1HFY23 and declining share of ICE products. BEV share in the Revenue mix was lower during Q2FY23 as the company had a large one time inventory correction from its major EV customer. However the sales have resumed at a normal run rate.

* North America accounts for highest Revenue share geographically followed by India, Europe, Asia resp. During the Quarter, weakness in Europe and Asia market was evident as the share of Revenue from Europe and Asia have decreased to 25% during H1FY23 when compared to 40% during FY22. However the gap have been filled by US and Indian Market. Share of Differential Gears in Revenue mix increased to 31% during H1FY23 as compared to 25% during FY22 whereas Micro/plug-in Hybrid started motor saw decline in share from 26% to 21% during H1FY23. The E2w/E3W continues the momentum with revenue share of 4% during H1FY23 when compared to 1.5% share in FY22.

* During the Quarter the company have added ? 4 billion to order book and consumed ? 4 billion of orders, keeping the order book total to ? 205,000 million as at the end of 2QFY23. As at the end of 1QFY23, the order books is 9.6x its FY22 revenue. On EV Order book, during the Quarter the company added one new EV programs from one existing customers for differential assembly. So with this addition the company has 37 EV programs across 23 different customers. The EV proportion in Order book is now 68%.

* We remain positive on the stock and expect good growth in long term supported by revenue visibility from Order book, increasing EV penetration and companiesfocus on BEV portfolio. We maintain our BUY rating on the stock with a revised target price of ?634 per share.

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