This midcap auto components stock rallies over 11%: Here's why

Shares of Sona BLW Precision Forgings surged implicit 11 per cent astatine the day's precocious to Rs 713.75 successful Thursday's commercialized (October 24) The crisp spike successful the banal terms came aft Hong Kong-based brokerage CLSA upgraded the banal to 'outperform' from the earlier 'hold' view, portion raising the people to Rs 715 from Rs 690.

CLSA upgraded the banal arsenic it believes the acquisition of the railway instrumentality concern of Escorts Kubota volition beryllium net accretive for the midcap company.

Meanwhile, the banal of Escorts Kubota traded with a chopped of 7 per cent astatine Rs 3,452.6 per stock connected the BSE.

The institution is acceptable to participate the railway components assemblage with the execution of the statement to get Escorts Kubota Limited’s Railways Equipment Division.

"Sona BLW Precision Forgings Ltd. (Sona Comstar), a starring planetary supplier of mobility exertion solutions, has entered into an statement (Agreement) with Escorts Kubota (EKL) to get the Railway Equipment Division of EKL (RED), arsenic going concern, connected slump merchantability basis, for an endeavor worth of INR 1,600 Crore (Rupees 1 1000 six 100 crore)," noted the company's property release.

The acquisition volition beryllium completed by September 30, 2025.

How volition the acquisition of railway instrumentality concern interaction Sona BLW?

Zee Business analysts done the acquisition foresee the company's enlargement into the broader mobility sector. Furthemore, the company's absorption stated that EPS will beryllium accretive from FY26. The income from the RED business during the fiscal ending 2024 was reported astatine Rs 950 crore.

Sona BLW Precision Q2 results

During Q2FY25, the company's PAT accrued 16% on-year, portion gross registered 17 per cent year-on-year (YoY) maturation to Rs 925 crore. EBITDA during the play was recorded astatine Rs 255 crore with a borderline of 27.6 per cent. 

Furthermore, EV programs lend 78 per cent to the nett bid publication of Rs. 23,100 crores arsenic of September 30, 2024, added the company's property release.