Sona BLW Precision Forgings Rise Over 6% A Day After Block Deal; Know Why

Shares of Sona BLW Precision Forgings (Sona Comstar) rallied 8 per cent to Rs 436.25 in Tuesday’s intra-day trade on BSE, a day after the American private equity firm Blackstone sold its entire 20.5 per cent stake for about Rs 4,916 crore via a block deal.

Private equity firm Blackstone, which held a stake in Sona BLW through an entity called Singapore VII Topco III PTE Ltd, sold nearly 12 crore shares in the company for Rs 4,917 crore on Monday in the open market at an average price of Rs 410.04 apiece.

The scrip started trading higher on Tuesday’s intraday trade after foreign investors, mutual funds, sovereign wealth funds and insurance companies bought Blackstone’s 20.5 per cent stake.

Some of the marquee buyers in this deal were the Government of Singapore, Societe Generale, Fidelity Asian Values Plc, BNP Paribas Arbitrage and the Monetary Authority of Singapore. Among mutual funds who bought stake included HDFC Mutual Fund and ICICI Prudential.

Before this transaction, Aureus Investment and Blackstone held 33 per cent and 20.5 per cent, respectively, of Sona Comstar.

Promoters and promoter groups hold a 53.53 per cent stake in the company, while 46.47 per cent rests with the public. Among the public shareholders, mutual funds own about 21.78 per cent, and foreign investors have a stake of 11.06 per cent. Both promoters and FIIs have reduced their shareholding marginally in the December quarter.

Sona Comstar was formed by the merger of Sona BLW Precision Forgings Ltd. and Comstar Automotive Technologies Pvt. Ltd. in 2019. Sona Comstar is a traction motor and motor-controller supplier to electric two-wheelers.

Sona Comstar was formed by the merger of Sona BLW Precision Forgings Ltd. and Comstar Automotive Technologies Pvt. Ltd. in 2019. Sona Comstar is a traction motor and motor-controller supplier to electric two-wheelers.

Brokerage firm CLSA maintained its buy rating on the stock but cut its price target to Rs 529 from Rs 566 earlier. The firm said that Sona BLW has a very strong order book and their EBITDA margin may increase led by the PLI scheme and product mix. The note further added that the exit of Blackstone will not change their thesis on the company.

Sona BLW reported its highest ever quarterly revenue and net profit in the December period.

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