Prime Highlights:
- BofA Securities upgraded Sona BLW Precision Forgings Ltd. to a “buy” rating and raised its price target to ₹640, pointing to a potential 25% upside.
- The brokerage expects strong growth from the company’s electric vehicle traction motors, driveline segment recovery, and emerging opportunities in the railways business.
Key Facts:
- Sona BLW Precision Forgings Ltd. shares rose around 4% to ₹532.3 and are nearing their recent 52-week high of ₹559.5.
- BofA Securities forecasts the company’s revenue to grow at a 20% CAGR and earnings per share at a 23% CAGR between FY2026 and FY2028.
Background:
Shares of Sona BLW Precision Forgings Ltd. climbed about 4 percent on Wednesday after BofA Securities upgraded the stock to “buy” and raised its price target, citing improving business momentum and multiple growth drivers.
In its latest note, BofA Securities increased the target price for the auto components maker to ₹640 from ₹600 earlier. The revised target suggests a potential upside of around 25 percent from the previous closing level. The brokerage said the company has returned to a growth path after facing a challenging period earlier.
The firm highlighted three major factors that could support the company’s expansion in the coming years. First, its traction motor business for electric two-wheelers and three-wheelers is expected to double over the next two years. Second, the company’s driveline segment has started to grow again after remaining largely stagnant for nearly two years.
The brokerage also pointed to the company’s railways segment as a potential long-term growth driver, noting that the sector has high entry barriers that could benefit the company.
Reflecting these expectations, BofA Securities raised its earnings per share estimates for Sona BLW Precision Forgings Ltd. by about 2 to 7 percent. It expects the company’s revenue to grow at a compound annual growth rate of around 20 percent between financial years 2026 and 2028, while earnings per share could increase at a CAGR of about 23 percent during the same period.
The stock continues to attract strong analyst support. Among 19 analysts covering Sona BLW Precision Forgings Ltd., 15 recommend buying the stock, three suggest holding it, and one has issued a sell rating. The average target price from analysts indicates a potential upside of around 7 percent from current levels.
Following the upgrade, shares of the company were trading around ₹532.3 on Wednesday, moving closer to their recent 52-week high of ₹559.5.