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Motilal Oswal IPO report on Sona BLW Precision Forgings
SBPFL started supplying differentiated gears/ assemblies in the global EV market since 2016/2018 and has garnered 5%/8.7% market share (as of CY20). These two products currently contribute 46% of revenues while balance 51% comes from starter motors (SM; both Hybrid and conventional). In SM it has 3% market share globally. Global EV and Micro-Hybrid/Hybrid markets form 41% of revenue (18% in FY19) while conventional powertrains constitutes the remaining. Given government’s thrust globally and changing customer preferences, EV and mild hybrid sales are expected to grow 5x by 2025, accounting for 33% global production (8% currently), thus presenting huge opportunity for SBPFL.
Valuation and Outlook
We like SBPFL given its presence in fast growing global EV market, diversified portfolio across categories and robust financials. The issue is valued at 74.1x FY21 P/E on post issue basis. Though the valuation appears fully priced in, given its thrust in fast evolving EV space both in India and globally, market would like to give premium to such emerging growth story. Hence, we recommend Subscribe for Long Term.
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