Shares of this auto ancillary company rally after the announcement of EPS accreditive acquisition!

Yesterday, the company reported that it has signed an agreement to acquire a 54% equity stake in a Serbia-based company.

The shares of Sona BLW Precision Forgings Ltd (Sona Comstar) are buzzing on the bourses today. As of 11.58 am, the shares of the company are trading higher by 7.50%. Today, the company reported a spurt in trading volume by more than 4.42 times. Owing to this, the stock is one of the top gainers on BSE from Group A. Meanwhile, the frontline index S&P BSE Sensex is down by 0.94%.

The rally in the share price of Sona BLW Precision Forgings Ltd has come on the back of a significant announcement made by the company.

Yesterday, the company reported that it has signed an agreement to acquire a 54% equity stake in NOVELIC, a Serbia-based company that is a leading provider of mmWave radar sensors, perception solutions and full-stack embedded systems.

ADAS sensors are a fast-growing category in the automotive industry, with a potential market size of USD 43 billion in 2030. Notably, NOVELIC is one of the very few profitable, high-tech, and fast-growing companies in the ADAS Sensor space. It is vertically integrated across the value chain from machine learning and perception software to hardware and chip design; its partners include global automotive OEMs, autonomous vehicle makers, Tier-1s and chip manufacturers like Infineon and Texas Instruments.

The acquisition is expected to be EPS accretive for Sona Comstar from the first year and offers strong growth opportunities over the medium term.

The company is currently trading at a TTM PE of 68x, as against the industry PE of 35x. In FY22, the company delivered an ROE & ROCE of 21.4% and 23.6%, respectively. The company is a constituent of Group A stocks and commands a market capitalization of Rs 26,410.68 crore.

Today, the scrip opened at Rs 446 and has touched a high and low of Rs 457.30 and Rs 431.55, respectively. So far 2,98,037 shares have been traded on the bourses. The stock has a 52-week high & low of Rs 795 and Rs 397.35 respectively on BSE.