Sona Koyo posted a really strong set of numbers today. The analysts were expecting the profit to be around 9.4 cr down 6% on a YoY basis and net sales to be around 291 cr up 20%. However Sona Koyo reported 290 cr on the topline which is pretty much in line with the estimates but net profit of 12 cr as against 10 cr which is way above estimates. Total revenues of FY11 were 1,032 cr as against 852 cr in FY10, up 21% and total net profit of FY11 were 37.41 cr as against 21.64 cr in FY10, up 73%. This set of numbers is definitely looking interesting to me.

PINC brokerage’s last report on Sona Koyo suggested net profits of 29 cr in FY11 but Sona Koyo infact posted net profits of 37 cr. Sona Koyo has posted 49 cr of profit on a consolidated basis because of two of the new subsidies started production this year thus bringing more profit. Sona Koyo has beaten analysts expectations by a huge margin. The management has said in an interview to CNBC TV18 that they will be maintaining good growth moving forward and we can easily expect revenues of 1250 cr in FY12 on a standalone basis which is a growth of 21% from FY11.

Sona Koyo has posted an EPS of 1.88 in a stand alone basis and 2.25 on a consolidated basis. Expecting a similar growth like topline in bottomline numbers, we can expect an EPS of 2.25 in standalone basis and probably 2.7 on a consolidated basis. I can safely assume my targets to be around a P/E multiple of 12x on standalone EPS of FY12 and value my target around that 25-27 mark.

Buy Sona Koyo (cmp: 18) with targets of 27 from a 12 months perspective.

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