Shares of Sona BLW Precision Forgings Limited were in green today, July 21 as brokerage firm UBS initiated 'buy' coverage on the stock, citing multiple growth engines and strong business legacy.
Sona BLW shares primarily traded in green, rising 1.27% intraday to Rs 723.65 apiece. The scrip was trading 0.55% higher by 11:48 am, while the benchmark Nifty 50 index is down 0.39%.
In its recent note, the brokerage set a target price of Rs 830 on the stock, marking an upside of 16.5% from its last closing price of Rs 714.5.
According to UBS, Sona is entering a new growth phase, driven by strategic investment, partnerships and initiatives to expand its addressable market. The "legacy" automotive business is expected to deliver healthy growth via market share gains, pricing benefits and a greater domestic focus. The brokerage expects its emerging businesses to scale rapidly over the next five years. Hence, it forecasted consolidated revenue/earnings CAGRs of -20%/-25% over the next 5 years, supported by an increasingly diversified business mix.
UBS highlighted Sona's capacity to identify and scale growth across humanoid robot components, railways and sensors. The integration of Comstar, resilience through the global EV slowdown and the railway acquisition demonstrate its ability to diversify revenue and adapt to evolving powertrain technologies. The brokerage believes that the company's entry into humanoid robotics offers meaningful long-term optionality.
The humanoid robotic market could scale to $30 billion to $50 billion by FY35 and expand to $1.4-1.7 trillion by FY50. On this assumption, UBS expects Sona to focus on body-related components, which represent roughly 35% of the value chain, implying an addressable market of $20 billion by FY35. Even a 5% market share in this segment is likely to generate revenue comparable to estimated FY30 consolidated revenue from other businesses. The brokerage did not factor any contribution from humanoid robotics into our forecast, due to the nascent stage of the industry, but views it as a significant potential source of long-term upside.
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