The data has been compiled from various sources and might have small difference but overall theme is to subscribe or not — we will focus on that

Sona BLW Precision forgings IPO– one of leading automotive technology companies in India and among top 10 globally for differential level gear segment.

Business — Designing, manufacturing and supplying differential assembly, gears, conventional and micro hybrid starter motors

~75% business comes from exporting

Offer purpose — Offer of 5550 cr for debt prepayment and exit of one of PE investors

Risks —

High valuations

Most of EV related business form one customer and client concentration risk for ~60% revenue from top 5 customers

Strength

Company has diversified business revenue mix in terms of geography, vehicle segment, powertrain and products

With about 40 per cent of its revenues from hybrids (mostly micro hybrids) and EVs, the company is a play on the growing market for cleaner vehicles across the globe

Future

Electric drive motors and inverters to Sona BLW’s existing product line of differential gears and assemblies for electric vehicles (EVs) has been added after the acquisition of comstar few years back

The expected change in product mix is value adding for the company as revenue realisations (and hence, profitability) for differential assemblies generally move up as the powertrain shifts from combustion to full hybrids and EVs.

Valuations

Very expensive looking at last results

As consolidation and revenue mix changes, may become available at decent valuations

Should we apply?

People can ideally avoid and if one subscribe, then do for possible listing gains only. If no listing gains then may need to hold longer

Recommended to sell if getting 10-20% gains on listing day

One can wait to enter at low prices for investment purposes after listing

Also Read

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CAMS IPO crisp summary — Listed with 20% gains as shared

Happiest Minds IPO crisp summary –Listed with substantial gains as shared

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