Sona Comstar IPO: How a bet on EVs, future-ready technology led to a INR16,700 crore valuation

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Automotive technology major Gold BLW as the IPO of accurate Forgings, or Sona Comstar, opened to membership on June 14, marking its numerous ups and downs, many acquisitions, confidence in power dynamics, and journeys dotted with solid returns for its existing investors.

The Rs 5,550 crore IPO includes a new Issue of Rs 300 crore and an offer of Rs 5,250 crore sale by Blackstone through Singapore Saptam Topco III. The price band has been fixed at 285-INR291 per share.

Ipo pricing may be available to some short-term investors with no easy profit. But here’s what the company stands out of the crowd.

As mentioned in the Red Herring Prospectus, Sona Comstar supplies to many global companies. Though the company refuses to name its customers, industry sources indicate that it’s number 3 customer is Tesla. Sources say Elon Musk is poised to become its top customer in the company FY22. The engagement started in 2016. However, returns are now coming with revenue from Tesla, which is described as ‘Global OEM of EVs’ in the prospectus, which has jumped from Rs 16.3 crore to Rs 195 crore in FY1and a teeny Rs 2.2 crore in FY19.

According to sources, the global OEM of EVs came to Sona Comstar with a problem – its inter-assembly was failing. Engineers in Sarona found that the problem was not limited to gear but also housing. He challenged in 2016 and ended an investment of Rs 30 crore-40 crore in the solution.

“When we introduced our electric vehicle (EV) inter-assembly, [only] 50,000-60,000 EVs were sold in the world, and no one cared. It’s about a lot going there and taking the right call at the right time. It’s happening to work well, says Vivek Vikram Singh, managing director and group CEO of Sona Comstar.

“I was young enough to be dumb, and we were taking a bet that the world would lose power,” he adds.

Tesla ended 2016 with a market cap of USD34 billion, a fraction of the USD600 billion valuation that now orders.

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