The analyst pointed to soft Q1 earnings driven by order delays and de-stocking, but highlighted a strong EV-linked order book and upcoming China JV as key medium-term drivers.
Sona BLW Precision Forgings (Sona Comstar) reported a subdued first quarter (Q1), marked by margin pressure and a decline in battery electric vehicle (BEV) revenues. But shares rose over 1% in early trade on Tuesday.
SEBI-registered analyst Rajneesh Sharma noted early signs of price bottoming, supported by technical strength and a robust EV-linked order book.
Earnings Review
Sona Comstar reported a muted performance in Q1, with revenue declining 5% year-on-year (YoY) and 7% sequentially to ₹850.9 crore.
EBITDA fell 19% YoY and 13% quarter-on-quarter (QoQ) to ₹202.5 crore, while net profit came in at ₹124.7 crore, down 12% from the previous year and 7% lower than Q4.
Margins came under pressure, with the EBITDA margin slipping 390 basis points year-on-year and 180 bps QoQ to 23.8%.
Battery electric vehicles (BEV) revenue, which now forms 28% of the total, fell sharply by 25% YoY and 18% QoQ to ₹210.6 crore.
According to Rajneesh Sharma, the dip was driven by global EV demand softness, a high base effect, and timing mismatches in order inflows.
He noted that while Q1 was weak, the company’s ₹26,200 crore order book, 75% of which is tied to EV programs, offers visibility for recovery in the second half of FY26.
The management expects sequential BEV growth in H2 FY26, stable full-year margins with operating leverage benefits. It plans to spend ₹900–1,000 crore in FY26 to support EV expansion and a China joint venture set to begin operations in H2.
Technical Breakdown
Rajneesh Sharma observed early signals of a trend reversal on the charts. He highlighted bullish divergences in both RSI and On-Balance Volume (OBV), suggesting accumulation as price stabilizes.
The stock recently bounced from ₹401.15, potentially forming a double-bottom. It is now testing a descending trendline, with ₹466.70 marked as a breakout trigger. Sharma said a move above this level could open a rally toward ₹551 or higher.
He added that while earnings remain soft, the base forming between ₹400 and ₹467 offers a favorable risk-reward setup, supported by the EV-led backlog and upcoming triggers like the China JV and three-wheeler wins.
On Stocktwits, retail sentiment for Sona was ‘neutral’ amid ‘normal’ message volume.
Sona BLW’s stock has declined 24.1% so far in 2025.
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