Sona BLW Precision Forgings share price surges 16% on improved June quarter earnings
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Sona BLW Precision Forgings share price touched a 52-week high of Rs 559.65, rising more than 16 percent intraday on August 10 after the company reported a net profit of Rs 82.2 crore in the quarter ended June 2021.
The company’s revenue was at Rs 501 crore, growing 226 percent YoY. The net order book was at Rs 14,000 crore as of June 30, 2021.
“The stock has completed its eight weeks of listing being a new IPO listed on June 21 and scaled an all-time high. It is holding its short-term average and moved higher with sharp volumes with positive momentum in the sector,” said Vikas Jain, Senior Research Analyst, Reliance Securities.
“The current up move can lead the stock higher near to Rs 538 levels being 61.8 percent Fibonacci move from the bottom of Rs 333 levels post listing,” he added.
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The company shares made a strong market debut, closing 25 percent higher on June 24.
The stock closed the session at the day’s high of Rs 362.85 on the BSE, rising 24.69 percent over the issue price of Rs 291 and hit the 20 percent upper circuit compared to the opening price of Rs 302.4.
At 1235 hours, Sona BLW Precision Forgings was quoting at Rs 545.10, up Rs 65.05, or 13.55 percent on the BSE.
Sona BLW surges 18% on strong Q1 results, healthy order book position
Shares of the recently listed auto parts and equipment company Sona BLW Precision Forgings (Sona Comstar) surged 18 per cent to Rs 484.20 on the BSE in intra-day trade on Monday after the company reported a strong set of numbers for the quarter ended June 2021 (Q1FY22).
Sona Comstar is a leading automotive technology company providing mission-critical systems and components for electrified and non-electrified powertrain segments. The company had made its market debut on June 24, 2021. The stock was trading at the highest level since its listing. With today’s surge, it has zoomed 66 per cent over its issue price of Rs 291 per share.
The company is one of the few companies globally, with the ability to design high power density electric vehicle (EV) systems handling high torque requirements with a lightweight design, while meeting stringent durability, performance and NVH specifications, enabling EV manufacturers to enhance the vehicle range, acceleration and the overall efficiency.
In Q1FY22, Sona Comstar reported a strong 226 per cent year-on-year (YoY) revenue growth of Rs 500.7 crore, due to 565 per cent growth in EV revenue and lockdown impact in the comparable quarter last year. Ebitda (earnings before interest, taxes, depreciation, and amortization) margin also improved YoY from 19 per cent to 27.7 per cent in Q1FY22 due to better product mix and operating leverage. On a sequential basis, Ebitda margins improved by 170 basis points (bp) from 26 per cent in Q4FY21.
Further, the company reported a net profit of Rs 82.2 crore compared to nil in the comparable quarter last year because of the lockdown impact. During the reported quarter, there is Rs 13.2 crore of exceptional gain related to the reversal of IPO-related expenses, the company said.
As on June 30, 2021, the company’s net order book stands at Rs 14,000 crore of which 57 per cent is from EV.
Net order book means the aggregate revenue from awarded programs which are either yet to start production or are yet to fully ramp up, in the next 10 years, after adjusting for the negative impact of all programs that are expected to reach end of life or be phased out. We have also applied a discount to accommodate any unforeseen delays or changes in program launches that may happen in the future, the company said.
The company has partnered with Israel’s IRP Nexus Group for a unique joint development project to develop a magnet-less powertrain, manufacture it and market it globally.
At 12:35 pm, Sona Comstar was trading 16 per cent higher at Rs 476.80 on the BSE, compared to a 0.16 per cent rise in the S&P BSE Sensex. The trading volumes on the counter jumped 5-fold with a combined 9.65 million equity shares having changed hands on the NSE and BSE.
Trade Spotlight: What should investors do with BASF India, Jubilant Industries and Sona BLW?
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Indian market closed in the green on August 9 after a muted closing in the previous trading session. Nifty closed above 16,200 levels while the S&P BSE Sensex saw a rally of more than 100 points.
Sectorally, buying was seen in banks, IT and finance while selling pressure was visible in metals, telecom, oil & gas and the public sector.
Stocks that were in focus included BASF India, which rallied over 8 percent to hit a fresh 52-week high, Jubilant Industries (rose 10 percent) and Sona BLW (gained over 16 percent). All three stocks hit a fresh 52-week high on Monday.
Here’s what Vikas Jain, Senior Research Analyst, Reliance Securities, recommends investors should do with these stocks when the market resumes trading today:
BASF India| Hold |Target: 4,000
The stock was trading sideways for a quarter and has now witnessed a breakout over the past few weeks, outperforming the broader markets.
Despite a sharp up move in price, it can move further as it has garnered higher delivery volumes.
The positive trend will continue until Rs 2,850 is not breached on the downside which is the 20-Day average and holding firm since the start of the rally from Apr-21.
Jubilant Industries | Book Profits
The stock continued the positive momentum, post its breakout, since the start of the current financial year April 2021.
It should face some resistance at current levels after a 160% up move over the past 4 months. RSI has moved to the higher band of 82 levels so risk-reward is not in favour of fresh longs and would advise booking profits.
SONA BLW | HOLD |Target: 538
The stock has completed its 8 weeks of listing being a new IPO listed on June 21 and scaled an all-time high. It is holding its short-term average and moved higher with sharp volumes with positive momentum in the sector.
The current up move can lead the stock higher near to 538 levels being 61.8% Fibonacci move from the bottom of 333 levels post listing.