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Sona BLW Precision Forgings (Sona Comstar) revenue was 2% above JMFe. EBITDAM at 28.1% was in-line. YoY margin improvement (+30bps) was led by favourable mix and higher operating leverage. Management indicated that light vehicle market (across most geographies barring EU) remained steady. However, weak OHV demand (India and US) is expected to be a drag on the performance. EV revenue grew 53% QoQ and the share of EV revenue stood at 33% during 1Q (29% in FY24) as the company continues to win new EV orders (c.79% of net order book). Strong net order book (INR 233bn as on Jun’24) and consistent expansion in product portfolio is expected to aid growth. Further, the company is evaluating inorganic opportunities which can help expand its product / technological capabilities (approved fund raise of up to INR24bn). Positive operating leverage is expected to support margins. Diversified revenue, increasing share of EVs/Hybrids and strong order book makes Sona Comstar one of the best plays in the EV space. We expect it to post a c.24% / 29% revenue / EPS CAGR over FY24-27E. Maintain BUY rating with Sept’25 TP of INR 760 (DCF based). Key risks are slower adoption of EVs and inability to win new customers/orders.

* 1QFY25 – Broadly in-line performance: Sona Comstar reported consolidated revenue of INR 8.9bn (+22% YoY, +1%QoQ), 2% above JMFe led by new order execution. Total revenue growth was ahead of the light vehicle sales growth in key markets (NA, India & Europe) owing to scale-up of revenue from new programs. EBITDA margin stood at 28.1% (+30bps YoY, +10bps QoQ), in-line with JMFe. YoY margin improvement was led by favourable product mix and higher operating leverage partially offset by higher freight cost. EBITDA came-in at INR 2.5bn (+24% YoY, +1% QoQ), 2% above JMFe. PAT stood at INR 1.4bn (+23%YoY, -4%QoQ), broadly in-line with JMFe.

*  EV business: EV revenue during 1Q increased +53% YoY (+4% QoQ) to INR 2.8bn. Sequential improvement in EV business was due to ramp-up of new programs. Share of BEV revenue stood at 33% during 1Q (29% in FY24). During the quarter, the company added one new EV program - to supply In-Cabin Sensors (ACAM) for an electric car worth INR ~1.5bn (SOP in Q3FY27) for a new-age OEM customer in Asian region. The company also added order worth INR 6.8bn to supply driveline products for Class 5 electric CV for an exisiting OEM customer based in NA (SOP in Q4FY25). With these additions, the company now has 55 EV programs with 31 different customers. Of these, 15 programs are in ramp-up phase and production is yet to commence for 28 programs.

* Demand outlook: Light Vehicle production grew by 3% across key geographies like North America, EU and India. However, OHV demand remains weak across both North America and India. The company remains cautious on PV demand in EU. It also indicated that E2W Traction Motor revenues remain sluggish and below company’s estimates. Aggregate value of the net order book increased by INR 7bn QoQ to INR 233bn (added / consumed INR 11bn / INR 4bn worth new orders); orders for EV/ PHEVs stood at 79% of the net order book as at the end of 1QFY25 amounting to INR 184bn. Basis the order wins and OEM program schedules the company expects EVs to continue to drive growth in the medium-to-longer term. Management believes that Hybrid technology may do well in the near-term and act as a bridge before the industry ultimately transitions to BEVs from 2035 onwards. The company may benefit even in the interim as its content per vehicle is highest in a Plug-in Hybrid. (high-torque DA + Starter Motor + Traction Motor)

* Other highlights: 1) Company board has approved fund raise of up to INR 24bn (in equity) towards inorganic opportunities (acquisition(s) or JV(s)) in the mobility space with advanced technological capabilities. 2) Company commercialised two products during 1Q - a) Park Gear for E-CVs and b) In-Cabin Sensor for child presence detection for electric PV. Further, the company added two new products in its technology roadmap - a) Integrated Hub Motor Controller and b) Integrated HV Motor Controller. 3) Company is pivoting Novelic from being an engineering services-led business to a product (Radar Sensors) and semiconductor chip design business by allocating more resources towards R&D and product development. 4) Company has been approved for 4 products (in E2Ws / E3Ws) so far for PLI benefit (few pending for approval). The company will recognise PLI benefits on receipt basis (likely from FY26).

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SEBI Registration Number is INM000010361