ICICI Securities maintains a bullish stance on Sona BLW Precision Forgings (SONA), an automotive ancillaries giant showing resilient performance amid global supply-chain disruptions. The brokerage upholds a BUY recommendation with a revised target price of Rs 600, projecting robust growth driven by a healthy order book (Rs 236 billion), expanded product portfolio, and strategic advances in electric vehicle (EV) solutions. Investors are encouraged to capitalize on the current momentum as SONA leverages industry headwinds, broadens its global reach, and increases operational margins. Key data points crystalize SONA’s formidable trajectory—quarterly revenues surpassing estimates, margin stabilization, promising EV program additions, and astute risk management—making it one of the most compelling bets in India's auto components sector.

Quarterly Performance: Surpassing Expectations

Sona BLW Precision Forgings delivered a commendable set of numbers for Q2FY26, despite a turbulent macro landscape. Consolidated revenue stood at Rs 11.4 billion, reflecting a 24% year-on-year and 34% sequential uptick, beating consensus by 5%. The reported EBITDA was Rs 2.89 billion—11% above estimates—at a margin of 25.3%, which, while down 230bps YoY, improved 150bps QoQ, signifying efficient cost management and improving operational leverage.
Adjusted PAT hit Rs 1.72 billion, an 11% rise YoY and 32% sequential surge, validating SONA’s strategic resilience and robust bottom-line expansion. Management commentary underscores buoyant demand for traction motors, off-highway vehicles (OHV), and the railway vertical as near-term growth catalysts.

EV Segment: Expansion and Innovation

SONA's expanding EV business now constitutes a formidable 32% of revenue, with 62 active EV programs across 32 clientele worldwide. Q2 saw the integration of two major programs: an Asian electric PV OEM (Rs 6.4 billion) and a European luxury autos OEM (Rs 1.8 billion), both slated for SOP in Q2FY27.
Innovative R&D led to the successful validation of rare earth-free motors for EV applications, marking an industry-first adoption and risk mitigation against magnet supply bottlenecks. Despite a YoY decline (17%) in BEV revenue, the pipeline’s diversity and scope support structurally higher growth over the medium term.

Order Book Strength and Geographic Expansion

The current order book towers at Rs 236 billion, with Rs 165 billion sourced from EV/PHEV orders—70% of the net OB—indicating an entrenched position in next-generation automotive platforms. SONA's global expansion gained momentum with the Mexico plant securing its maiden order to supply differential assemblies, opening new vistas across North America.
Management’s focus on product line diversification, especially in railway and agricultural machinery, anchors a multi-year growth story, further bolstered by potential future collaborations in China should geopolitical risks abate.

Financial Summary and Valuation Metrics

SONA’s forward guidance points to tangible value creation, as margins are forecasted to normalize within the 24-26% range and EPS estimates scale up by 2% over FY26-28. The table below summarizes the key financials:

The revised target price of Rs 600 is based on a discounted cash flow model, translating to 35x FY27E EPS. The current market price hovers around Rs 484, promising attractive upside potential for investors seeking exposure to India's auto sector evolution.

Risks and Mitigating Factors

Key risks on the horizon include macro-driven demand slowdowns, further delays in EV order SOPs, or rapid deceleration in electrification trends globally. US tariff exposure remains minimal for now (3% of revenues at risk), but the management is vigilant against supply-side volatilities—particularly in semiconductors and specialty metals.
SONA’s strategy of broad customer base, diversified income streams, and continuous product innovation provides a robust safety net, minimizing adverse shocks. The abeyance of the JNT China JV is a proactive move in response to shifting geopolitical winds, leaving collaboration options open for the future.

Investor Recommendation and Key Levels

ICICI Securities maintains its BUY recommendation for Sona BLW Precision Forgings with a one-year target price of Rs 600. Key technical levels: Current Market Price (CMP) is Rs 484; immediate resistance at Rs 535; investors are advised to accumulate in the Rs 480–Rs 500 range for optimal returns.