Synopsis: Auto Ancillary stock is strengthening its long-term growth outlook with a robust EV-focused order book, diversified revenue mix, and strong financial performance. UBS expects the company to deliver around 20% revenue CAGR and 25% earnings CAGR over the next five years.
The shares of this company which designs, manufactures, and supplies automotive systems and components, including differential assemblies, gears, hybrid systems, and EV traction motors across all vehicle segments are in the spotlight after it rose by 3 per cent in today’s market session following the brokerage UBS expecting the company to deliver 25% earnings CAGR over the next five years.
With a market capitalisation of Rs. 45,148 cr, the shares of Sona BLW Precision Forgings Ltd were trading at Rs. 729.45 per share, jumping 3% in today’s market session, making a high of Rs. 732, up from its previous close of Rs. 713.60 per share. The stock has delivered strong returns, gaining 50% over the past year, 54% year-to-date, 64% in the last six months, and 17% in the past month.
UBS Initiates Coverage with a Buy Rating
UBS has initiated coverage on Sona BLW Precision Forgings Ltd. with a ‘Buy’ rating and a target price of Rs. 830, 16% upside from previous closing levels, stating that the sum is greater than the parts. The brokerage believes the company combines a strong legacy automotive components business with multiple emerging growth drivers, creating significant long-term value.
According to UBS, Sona BLW has an established track record of successfully scaling adjacent businesses while positioning itself as an early mover in the rapidly evolving electric mobility ecosystem.
The brokerage expects the company’s increasingly diversified business mix to support strong financial performance, forecasting a consolidated revenue CAGR of around 20 percent and an earnings CAGR of approximately 25 percent over the next five years. UBS believes this diversified growth strategy and leadership in next-generation mobility components provide a solid foundation for sustained long-term growth.
In conclusion, Sona BLW Precision Forgings appears well-positioned for long-term growth, supported by its strong presence in automotive components, expanding electric vehicle portfolio, and diversified revenue streams. With UBS forecasting robust revenue and earnings growth over the next five years, the company’s execution on emerging mobility opportunities will be key to sustaining its strong stock performance and delivering long-term shareholder value.
About the company
Sona BLW Precision Forgings Ltd is one of India’s leading automotive technology companies, specialising in the design and manufacture of precision-forged and machined components for the global mobility industry. The company supplies differential assemblies, gears, motors, and driveline components to passenger vehicles, commercial vehicles, and electric vehicles (EVs).
It reported strong Q4 results, highlighted by a 52% year-on-year revenue surge to Rs. 1,172 crore. EBITDA increased by 33% to Rs. 285 crore, while net profit grew 36% to Rs. 207 crore. Sequentially, bottom-line growth expanded by 35%, driven by operational efficiency and strong demand across its core automotive systems.
The company demonstrated significant diversification in its market and product mix throughout FY26. Domestically, India’s revenue contribution jumped from 29% to 51%, while non-automotive segments surged to 31% of the revenue mix. Differential gears (22%), differential assemblies (17%), and hybrid starter motors (16%) remained top product drivers, accompanied by an expanding presence in railway systems and EV traction motors.
The company maintains a robust net order book of Rs. 23,700 crore, which added Rs. 1,400 crore in fresh orders during the quarter. Electric vehicle (EV) programs dominate this pipeline, accounting for 70% (Rs. 16,600 crore) of total orders, positioning the company for sustained long-term growth across electric and industrial mobility markets.
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