Sona BLW share price tanks 6% after Blackstone stake sale report; Should you buy, hold or sell?

Sona BLW share price tanked 6 per cent on Thursday to hit an intraday low of Rs 507 on NSE. The share price drop comes after it was reported that Blackstone Inc. is looking to raise as much as Rs 3,180 crore through the sale of shares in the automotive component maker Sona Comstar. According to a Bloomberg report, an affiliate of the US firm is offering the shares in Sona BLW Precision Forgings Ltd., as it is formally known, at Rs 500 each, a 7.2% discount to Wednesday’s closing price. If there’s enough investor demand, Blackstone could reportedly also increase the deal size to Rs 39.7 billion, according to the terms. 

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Rahul Goud, Research Analyst – Equity Research, CapitalVia Research said, “Sona BLW Precision Forgings specializes in automobile technologies. The business specialises in the development, production, and distribution of engineered automotive systems and components”. He also added saying that with a PE of 87 right now, the stock has produced returns of 8.61 per cent for the year. In fiscal year 22, the company earned free cash flow of 97.37 crore. It demonstrates the company’s healthy balance sheet. “Technically, the stock is trading in a triangle-shaped chart formation; it is best to purchase this dip at a price of Rs 519 with a stop loss of Rs 480 in order to reach the short-term target price of Rs 650,” Goud added.

Correction offers opportunity to add this quality stock

Sona BLW Precision Forgings Ltd will be one of the biggest beneficiaries of the transition from ICE to EV vehicles globally. The focus on high-growth products like differential gear assemblies, traction motors & controllers will ensure a robust growth outlook in the coming years, according to Punit Patni, Equity Research Analyst, Swastika Investmart. “Additionally, the current order book of Rs 205 billion for the next decade provides good growth visibility. We are positive about the company for its technological prowess, focus on R&D, technical tie-ups, constant drive to add new high growth & business segments, and the ability to generate free cash flows. Thus, the recent correction provides a remarkable opportunity to add this quality company,” Patni said.

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