Sona BLW Q2 Review — Motilal Oswal Stays 'Neutral' Post Steady Results Amid Challenging Macro

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Motilal Oswal Report

Sona BLW Precision Forgings Ltd.’s consolidated revenue/Ebitda/adjusted PAT rose ~24%/13%/11% YoY to Rs 11.4 billion/Rs 2.9 billion/Rs 1.7 billion. Q2 results are not comparable to our estimates as it was the first quarter after the railway division integration, while our estimates factored in the core business. Ebitda margins fell 230bp YoY to 25.3% due to an adverse mix, lower operating leverage and the integration of the railway business.

We earlier valued the railway division separately.

However, given that the company would not be disclosing segmental financials, we have now integrated the railway division’s financials into our estimates.

As a result, we have upgraded the earnings estimates by 27%/20% for FY26/FY27. However, this would also warrant a de-rating for the consolidated entity, in our view.

Hence, we lower our target multiple for the consolidated entity to 34 times from 36 times earlier for the core. As a result, our target price now stands at Rs 448 per share (valued at 34x Sep’27E EPS).

Maintain Neutral.

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