Sona BLW Precision Forgings shares fell 4.41% to Rs 580.45 on Monday — making it one of the top losers on the NSE — and the move is puzzling at first glance because the company just reported its best-ever quarterly performance across every key metric.
This is a classic case of “buy the rumour, sell the news.”
The record results that should have sent shares higher
Revenue for Q4 FY26 came in at Rs 1,272 crore, up 47% year-on-year. EBITDA grew 32% to Rs 311 crore with a margin of 24.4%. PAT rose 17% to Rs 192 crore with a net profit margin of 14.7%. BEV revenue share hit an all-time high of 39% in Q4, with BEV revenue growing 22% year-on-year.
The company also won four driveline orders in the quarter — three EV programs and one hybrid — and for the first time won three orders from European OEMs in a single quarter, marking its first EV program win from Europe in almost four years.
For the full year FY26, revenue grew 26% to Rs 4,475 crore. The board recommended a final dividend of Rs 1.80 per share. The company also secured Rs 5.8 billion in new orders from global and domestic OEMs, focused on EV and hybrid technologies.
So why are the shares falling?
Three reasons explain the selloff despite the record numbers.
First, valuation. The stock had already rallied significantly ahead of results — trading near its 52-week high of Rs 614 at the close on Friday — with the strong quarter largely priced in. When a stock is near its 52-week high going into results, even a strong beat can trigger profit-booking.
Second, margin optics. While EBITDA margin at 24.4% is healthy, it represents only modest expansion despite the 47% revenue surge — suggesting cost pressures are absorbing a significant portion of the topline growth. Investors in a high-PE stock at 56 times earnings expect margin expansion to accelerate alongside revenue, not just keep pace.
Third, PAT growth of only 17% against revenue growth of 47% raises questions. Total expenses jumped sharply to Rs 1,043 crore from Rs 703 crore — higher input costs and employee expenses are eating into what should be a more leveraged bottom line at this revenue scale.
A block trade of 3,02,568 shares worth Rs 17.78 crore at Rs 587.60 per share on the NSE also added selling pressure — suggesting institutional profit-booking was already underway even before Monday’s session.
The underlying business is clearly strong. But at Rs 580, the market is simply repricing from a level that had already factored in most of the good news.
Disclaimer: This article is for informational purposes only and does not constitute investment advice. Please consult a qualified financial advisor before making investment decisions.