Thread by @myfinology

⚙️ Sona Comstar

India's market leader in auto motors, gears and a bet on the rise of EVs globally

A thread on why we still did not recommend the stock ⤵️

Sona Comstar is an auto ancillary company that supplies gears and motors to auto companies in India, North America, Europe, China, etc.

#business #sonacoms

Strengths:

• Increasing global market share in gears and starter motors
• A dominant and evolving presence in EV parts
• Supplies to emerging & developed global markets
• Expanding product portfolio and customer base

Weaknesses:

• Macro challenges in Europe (18% of revenue) are a concern
• Demand outlook in China is uncertain
• Raw material (alloy steel) pricing pressure persists
• Revenue & margins affected by global demand, regulations & taxes

Sona Comstar's report card by Recipe:

✅ Quality business model
✅ Ethical management
✅ Robust financials
✅ Strong growth prospects
❌ Reasonable valuations
❓ Adequate safety net

#Stocks #Investment

Our take:

As discussed above, we love the company due to its strong growth prospects.

However, there is an element of risk due to global uncertainties and the valuation is stretched too. It's under our review currently.

Sona scored 67% in Recipe's scorecard. But we require a minimum of 90-100% to recommend a stock.

➡️ View our recommendations now at Recipe.finology.in/stock-and-mutu…