Sona Comstar's decision to partner with Japanese auto technology giant Denso has strengthened the Street's confidence in the company's electric mobility ambitions, with brokerages arguing that the deal expands its addressable market across both two-wheelers and four-wheelers.
Jefferies and Citi maintained their bullish stance on the stock after the announcement, saying the partnership arrives at a time when electric vehicle adoption is accelerating across vehicle segments in India.
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he brokerages also see the transaction as strategically important because it deepens Sona Comstar's presence in EV powertrains, particularly in the passenger vehicle segment where its footprint has been relatively smaller.
Here's What Brokerages Said After The Announcement:
Jefferies
- Maintained Buy with a target price of Rs 700.
- Said the partnership with Denso creates expanding opportunities for Sona Comstar.
- Believes the timing is favourable given the rising pace of EV adoption across both two-wheelers and four-wheelers in India.
Citi
- Maintained Buy with a target price of Rs 700.
- Said the two joint ventures with Denso strengthen Sona Comstar's position in the EV powertrain business.
- Views the deal positively because it expands the company's presence in the four-wheeler EV powertrain segment, where it has had relatively limited exposure.
What The Deal Involves
Sona Comstar and Denso have signed definitive agreements to establish two joint ventures focused on developing, designing, manufacturing and marketing advanced electric and hybrid powertrain systems.
The first JV will focus on high-voltage liquid-cooled traction inverters, traction motors and generators for electric and hybrid passenger vehicles, commercial vehicles and other high-voltage applications. Denso will hold 51% and have management control, while Sona Comstar will own 49%.
The second JV will target electric and hybrid two- and three-wheelers, including air-cooled traction inverters, traction motors, generators and e-Axles. Sona Comstar will hold 51% and retain management control, while Denso will acquire 49% at an enterprise value of Rs 1,750 crore.
Both companies said the partnership combines Denso's electrification technology and R&D capabilities with Sona Comstar's engineering, manufacturing and supply-chain strengths to build scalable, cost-efficient powertrain solutions from India for both domestic and global markets.
The transaction remains subject to regulatory approvals and customary closing conditions.
Vivek Vikram Singh, MD and Group CEO of Sona Comstar, said: “We have always believed that the future of mobility will be defined by companies that continuously invest in innovation, product development and industrialisation of advanced technologies. This partnership marks an historic milestone in Sona Comstar's journey as a mobility technology company and reflects the capabilities we have built across advanced electric powertrain systems over the years. DENSO is a company we have immense respect for, as they have been at the forefront of automotive innovation globally for decades with deep expertise in electrification technologies.”
“We are honored and delighted to partner with DENSO to bring together the complementary strengths of both companies and build advanced electric and hybrid powertrain solutions for four-wheelers and larger vehicle applications. This partnership will also accelerate the growth of our existing electric powertrain business for two and three-wheelers by strengthening our capabilities across the powertrain value chain and enabling us to serve a broader set of customers,” Singh added.
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