⚠ Disclaimer: This report is generated using AI tools and is for informational purposes only. It does not constitute investment advice. Please consult a registered financial advisor before making any investment decisions.
SONACOMS - Fundamental Analysis: Financial Health & Valuation
Back to ListFundamental Rating: 3.9
| Stock Code | SONACOMS | Market Cap | 30,461 Cr. | Current Price | 490 ₹ | High / Low | 560 ₹ |
| Stock P/E | 48.3 | Book Value | 89.7 ₹ | Dividend Yield | 0.65 % | ROCE | 18.3 % |
| ROE | 14.2 % | Face Value | 10.0 ₹ | DMA 50 | 476 ₹ | DMA 200 | 487 ₹ |
| Chg in FII Hold | 0.42 % | Chg in DII Hold | 0.61 % | PAT Qtr | 183 Cr. | PAT Prev Qtr | 168 Cr. |
| RSI | 57.5 | MACD | 2.47 | Volume | 7,38,842 | Avg Vol 1Wk | 32,29,306 |
| Low price | 380 ₹ | High price | 560 ₹ | PEG Ratio | 2.69 | Debt to equity | 0.03 |
| 52w Index | 61.2 % | Qtr Profit Var | 26.0 % | EPS | 9.50 ₹ | Industry PE | 28.0 |
📊 Core Financials
- Quarterly PAT at 183 Cr vs 168 Cr previously, showing healthy sequential growth (+26%).
- ROE at 14.2% and ROCE at 18.3% reflect solid capital efficiency.
- Debt-to-equity ratio at 0.03 indicates a virtually debt-free balance sheet.
- EPS at 9.50 ₹ provides a reasonable earnings base, supported by consistent profitability.
💹 Valuation Indicators
- P/E ratio: 48.3, significantly higher than industry average of 28.0, suggesting overvaluation.
- P/B ratio: ~5.5 (490 ₹ / 89.7 ₹ book value), showing premium pricing.
- PEG ratio: 2.69, indicating valuation is expensive relative to growth.
- Intrinsic value appears lower than current price, limited margin of safety.
🏢 Business Model & Competitive Advantage
- Sona Comstar operates in automotive components, focusing on EV drivetrains, precision motors, and gear systems.
- Competitive advantage lies in strong EV exposure, global client base, and advanced technology.
- Positioned well to benefit from EV adoption and global automotive electrification trends.
📈 Entry Zone & Long-Term Guidance
- Entry zone: 460–480 ₹ range (near 50 DMA at 476 ₹ and 200 DMA at 487 ₹).
- Long-term holding viable for investors seeking exposure to EV component growth.
- Accumulation should be cautious due to stretched valuations despite strong fundamentals.
Positive
- Strong ROCE (18.3%) and ROE (14.2%).
- Debt-free balance sheet (Debt-to-equity 0.03).
- Quarterly PAT growth (+26%) highlights operational strength.
- FII (+0.42%) and DII (+0.61%) holdings increased, showing investor confidence.
Limitation
- High P/E (48.3) compared to industry average (28.0).
- PEG ratio at 2.69 indicates expensive growth-adjusted valuation.
- Dividend yield at 0.65% is modest.
Company Negative News
- Valuations remain stretched relative to industry peers.
- Stock trading close to resistance levels (560 ₹ high), limiting upside in near term.
Company Positive News
- Sequential PAT growth (183 Cr vs 168 Cr).
- Strong investor confidence with both FII and DII holdings increasing.
- Exposure to EV sector provides long-term growth potential.
Industry
- Industry PE at 28.0, much lower than Sona Comstar’s 48.3, highlighting sector undervaluation relative to Sona.
- Automotive and EV component industry expected to grow steadily with electrification demand.
Conclusion
- Sona Comstar is fundamentally strong with high returns, debt-free operations, and EV-driven growth potential.
- Valuations remain stretched, making accumulation near 460–480 ₹ more attractive.
- Best suited for long-term investors seeking EV component exposure, but caution advised due to premium valuations.
I can also prepare a peer comparison with Motherson Sumi and Bosch to highlight how Sona Comstar stacks up in valuation and profitability. Would you like me to draft that next?