Brokerages Split On Sona BLW: Jefferies Hikes Target Price On New Growth Avenues, While Citi Trims

Jefferies has demonstrated a more bullish stance by hiking its target price to Rs 585 from Rs 515, citing the company's "regained momentum and new growth avenues" as the primary drivers.

In contrast, Citi has opted for a cautious approach by marginally cutting its price target from Rs 630 to Rs 610, though it remains positive on the stock.

Citi's analysis is focused on the company's strong fundamentals, specifically highlighting its "impressive margin trajectory and diversification amidst global uncertainties."

The dual 'Buy' ratings show that the analysts are confident in the forging major, even as they have diversified takes on the immediate ceiling for its valuation. And this is based on the varying emphasis on future growth compared to the current operational performance.

The optimism from Jefferies stems from Sona BLW's significant turnaround in the September quarter, which saw the company's Ebitda growth of 13% year-over-year, largely propelled by a recent railway business acquisition.

The firm highlighted that Sona is actively pursuing new avenues for expansion, including orders for its Mexico plant, the development of rare-earth-free motors, and new suspension modules. A strategic advantage is also emerging in Europe, where Sona BLW is likely to secure new business following the insolvency filings of three competitors.

Based on this robust outlook, Jefferies raised its estimated earnings per share for the financial years 2026 through 2028 by 14% to 17%.

Citi’s decision to slightly cut the Target Price, while keeping a Buy stance, followed the second quarter results. The brokerage noted that the quarterly Ebitda was ahead of its estimates, and Profit After Tax was in-line.

Citi emphasised that the company's aggressive diversification strategy remains key to successfully navigating the prevailing uncertainties in global demand.

Further, the firm praised Sona BLW's sustained and impressive operating margin trajectory, showing confidence in the company’s operational strength despite the marginal Target Price adjustment.