Sona BLW Precision Forgings, an automotive technology company, on Tuesday witnessed a strong rebound in its share price after progressively losing 11.29% of its value in the last four trading days.
The stock opened positively at ₹415.50 and maintained the same momentum during early trade, reaching an intraday high of ₹435, which is 7% higher than the previous day's closing price of ₹406.20.
The company's shares lost 6.90% of their value during the previous trading session after private equity firm Blackstone sold its 20.50% stake in the company for approximately ₹4,917 crore via a block deal.
The private equity firm sold its stake in Sona BLW through its affiliate, Singapore VII Topco III Pte Ltd. The shares were sold at a price of ₹410 apiece, which is a 6% discount compared to the closing price on Friday.
According to the shareholding pattern with the BSE, Blackstone owned 19.93 crore shares, which is equivalent to 34.12% of Sona BLW, as of the June 2022 quarter.
In August last year, Blackstone sold 13.6% of its stake in Sona BLW Precision for over ₹4,000 crore. With the recent transaction, Blackstone sold almost all of its remaining stake in the company.
Sona BLW Precision is a mid-cap stock with a market capitalization of ₹25,239.7 crore. The company is engaged in designing, manufacturing, and supplying engineered automotive systems and components, such as differential assemblies, gears, conventional and micro-hybrid motors, BSG systems, and EV traction motors, across all vehicle categories.
The company's shares made a successful market debut in June 2021 at ₹302 apiece, compared to the issue price of ₹291. The stock continued to rise further and closed at Rs. 362 on the first day, resulting in an increase of more than 24% over the IPO price.
The stock witnessed a sharp surge of 132% within six months of its listing, soaring to an all-time high of ₹839. At current levels, the stock is trading 48% above its issue price.
Earlier this year, in January, the company made a strategic move by acquiring a 54% stake in Novelic, a Serbia-based company, for ₹356 crore. This acquisition has allowed the company to enter the advanced driver assistance systems sensor market.
In Q3 FY23, the company reported strong numbers, with its consolidated net profit soaring 26.31% YoY to ₹96 crore. The company had posted a net profit of ₹76 crore in the corresponding quarter of last year.
Total revenue increased by nearly 42.59% to ₹626 crore in the December quarter of FY23, compared to ₹439 crore in the same period last year.
Further, the company recorded its highest-ever EBITDA margin of 27% during the quarter, an expansion of 200 bps QoQ and 100 bps YoY. The operating profit margin came in at ₹170 crore, an increase of 46.5% YoY.
Following the company's Q3 performance, domestic brokerage firm ICICI Securities has retained its "buy" call on the stock with a revised target price of ₹574 apiece from ₹645 earlier.
"Factoring in the Novelic acquisition funding, the recent slowdown in the momentum of global PV electrification, and the loss in starter motor market share are the main reasons for our earnings cut," said the brokerage.
14 analysts polled by MintGenie on average have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
