Sona BLW IPO (Sona Comstar IPO) – Dates, Issue Price Band and Review
Automotive technology leader Sona BLW IPO, aka Sona Comstar IPO would open for subscription on 14th June 2021. Company generated stable revenue growth in the last 3 years and 9 months. In current pandemic, auto sector has taken set back. This might continue for another few months. In this situation, should you invest in Sona BLW IPO? How is Sona BLW IPO (aka Sona Comstar IPO) valued?
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About Sona BLW Precision Forgings Limited
Sona BLW Precision Forgings Limited is one of the India’s leading automotive technology companies. The company is primarily engaged in designing, manufacturing, and supplying high-quality mission-critical automotive components such as differential assemblies, gears, conventional and micro-hybrid starter motors, etc.
Sona BLW Precision competitive strengths
1) It is one of the leading manufacturers and suppliers to the global EV market.
2) Company has large product portfolio.
3) Company is diversified across automotive geographies, vehicle segments, and customers.
4) It has strong Research & Development (R&D) capabilities.
5) Company has consistent financial performance track record.
Sona BLW IPO Dates, Price Band and Issue Details
Sona BLW IPO would open on Monday 14th June 2021 and closes on Wed 16th June 2021. Sona BLW IPO Price band is Rs 285 to Rs 291. Here are the IPO details.
| IPO Opening Date | 14-Jun-21 |
| IPO Closing Date | 16-Jun-21 |
| Issue Type | Book Built Issue IPO |
| Face Value | Rs 10 per equity share |
| IPO Price band | Rs 285 to Rs 291 per equity share |
| Lot Size | 51 Shares |
| Min Order Quantity | 51 Shares |
| Listing at | BSE and NSE |
| Issue Size | Rs 5,550 Crores i) OFS – Rs 5,250 Crores 2) Fresh issue – Rs 300 Crores |
What are the objects of the issue?
Here are the objects of the IPO issue.
1) Offer for Sale for Rs 5,250 Crores: Under OFS, selling shareholders would sell the shares and the company would not get any proceeds from this offer.
2) Fresh Issue for Rs 300 Crores:
i) Repayment or prepayment of company’s borrowings fully or partially.
ii) General corporate purposes.
Who are the company promoters?
Sunjay Kapur, Sona Autocomp Holdings Private Limited and Singapore VII Topco III Pte. Ltd are the company promoters.
Company Financial Performance
Here are the consolidated revenue and profit details in the last 3 years and 9 months.
| FY | Total Revenues (Rs in Mns) | Profits after tax (Rs in Mns) |
Profit % |
|---|---|---|---|
| Mar-18 | 6,259.2 | 775.7 | 12.4% |
| Mar-19 | 7,025.0 | 1,731.8 | 24.7% |
| Mar-20 | 10,437.6 | 3,603.0 | 34.5% |
| 9 Months ending Dec-20 | 10,296.2 | 1,554.6 | 15.1% |
Its EPS for FY2020 is Rs 7.06 and last 3 years average EPS is Rs 5.65. For 9 months ended Dec-20, its EPS was at Rs 2.71.
Why to invest in Sona BLW IPO?
Here are a few reasons to invest.
1) Sona BLW Precision Forgings Limited is one of the leading automotive technology companies in India.
2) Company generated consistent revenue growth in the last 3 years and 9 months.
3) Company margins are on improvement mode between FY2018 and FY2020. However, for 9 months ended Dec-20, its margins fallen to 15.1% compared to FY2020 margins of 34.5%.
Risk Factors of investing in this IPO
1) Company business is dependent on performance of automotive sector globally which includes its key markets in US, Europe, India and China. If there are any adverse changes in the conditions affecting these markets, it can have impact on company business
2) Company business largely depends on top 10 customers and loss of such customers or reduction in their purchases budget can have adverse impact on business.
3) Covid pandemic or any other similar public health threat could adversely affect its business
4) Company is working on development of technologically advanced systems and components and involves lengthy and expensive process which is uncertain in terms of timelines and outcomes. They depend the success on its R&D and failure can create costs which needs to be write-offs. This can affect company business.
5) For complete internal and external risk factors, you can refer the RHP of the company.
Sona BLW IPO Dates / Timetable / IPO Schedule (Tentative)
| Offer Open | 14-Jun-21 |
| Offer close | 16-Jun-21 |
| Finalization of Allotment | 21-Jun-21 |
| Initiation of Refunds | 22-Jun-21 |
| Credit to Demat Account | 23-Jun-21 |
| IPO Shares Listing Date | 24-Jun-21 |
Sona BLW IPO Price Valuations
1) On the upper price band of Rs 291 and EPS of Rs 7.06 for FY20, the P/E ratio works out to be 41x.
2) For the last 3 years average EPS of Rs 5.65, the P/E ratio is 51x.
3) If we annualize its 9 months ended Dec-21 EPS, the P/E ratio is 80x.
4) Means, the company asking price of Rs 291 of the upper price band is in the P/E range of 41x to 80x.
5) There are listed peers like Motherson Sumi, Sundaram Clayton, Varroc Engg, Bostch etc., which are trading at P/E between 46 to 148. However, these are not apple to apple comparable considering the business models.
However, consider these factors, Sona BLW Share Price of Rs 291 (upper price band) is fully priced.
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Sona BLW IPO Review – Should you invest?
Sona Comstar is one of the leading automotive technology companies in India.
Company is consistently growing in terms of revenue.
Company’s margins have improved between 2018 to 2020. However, due to covid pandemic, its 9 months ended Dec-20 margins have fallen. One can expect lower margins for couple of more quarters.
Sona BLW IPO price is fully priced.
Current pandemic could continue for couple of more quarters which would continue to affect auto sector. High risk Investors looking for long term perspective can invest in this IPO. Short to medium term investors can avoid at this point of time.
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Need your view on unlisted shares. I heard NSE has unlisted shares !
Unlisted shares are traded between friends / smaller groups. It has low liquidity. You cannot come out if you want money. It is high risk of investing in unlisted companies (unless you are investing huge money and buying a stake in the company). I would suggest you stay away from unlisted shares.
How much load of indian and foreign debt company is carrying and do they intend to be debt free ?
It has total debt of Rs 410.7 Crores. You can read more info on RHP page no. 359