Sona BLW Precision Forgings shares trade at 24.69% premium; what should be your listing day strategy?

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After listing at a modest premium of 3-4%, shares of  Gurugram-based Sona BLW Precision Forgings rallied 24.69% to Rs 362.85  apiece on June 24.

“Sona Comstar, despite being in a niche space of EV components, saw a little tepid listing premium due to its large issue size of Rs5550 crore. We like Sona Comstar given its presence in fast growing global EV market, diversified portfolio across categories and robust financials. Though the valuation at ~74x P/E appears fully priced in, given its thrust in fast evolving EV space both in India and globally, market would like to give premium to such emerging growth story,” said Hemang Jani, Head Equity Strategist, Broking & Distribution, Motilal Oswal Financial Services.

Sona BLW Precision Forgings (SBPF) is primarily engaged in designing, manufacturing and supplying highly engineered, mission-critical automotive systems and components such as differential assemblies, differential gears, conventional and micro-hybrid starter motors, BSG systems, EV traction motors [Brushless direct current (BLDC) motor and Permanent magnet synchronous motor (PMSM)] and motor control units to automotive original equipment manufacturers (OEMs) across the US, Europe, India and China, for both electrified and non-electrified powertrain segments.

Saurabh Joshi, Research Analyst at Marwadi Shares and Finance believes there is lot more gains coming up for a long-term investor as company is a global auto component player with thrust on the electric vehicle segment which is amongst the fastest growing segment. Also, the company is gaining global market share across products to reach a share of approximately 5.0% for differential bevel gears, 3.0% for starter motors and 8.7% for Battery Electric Vehicle (BEV) differential assemblies, in calendar year 2020.

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