Sona BLW Precision Forgings advanced 3.27% to Rs 436.30 after the company announced the signing of an agreement to acquire a 54% equity stake in sensors and software maker NOVELIC for euro 40.5 million.
Founded in 2012, NOVELIC is a Serbia-based company that provides mmWave radar sensors, perception solutions and full-stack embedded systems.
Advanced driver assistance systems (ADAS) sensors are a fast-growing category in the automotive industry, with a potential market size of around US$ 43 billion by 2030. It is one of the very few profitable, high-tech, and fast-growing companies in the ADAS sensor space.
The acquisition is expected to be EPS accretive for Sona Comstar from the first year and offers strong growth opportunities over the medium term.
NOVELIC's CY22 Revenue and PAT is estimated at euro 9.3 million and euro 2.5 million, respectively, and it has been profitable every year since its inception. It has grown at more than 50% CAGR over the last ten years without raising any external equity capital.
With this acquisition, Sona Comstar is foraying into the ADAS sensor market. NOVELIC 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.
With the acquisition of Novelic, Sona Comstar has started building its third business vertical of ADAS Sensors and Software to address the megatrends of increasing vehicle autonomy and automation.
The current NOVELIC team, led by its founders Mr Darko Tasovac, Mr Veljko Mihaljovic and Dr Veselin Brankovic, will continue to lead the operations, ensuring continuity while leveraging Sona Comstar's scale and customer access for business development. The founders will hold 46% equity in Novelic after the completion of the transaction.
Sona Comstar will acquire this 54% equity stake in NOVELIC for euro 40.5 million through a combination of primary and secondary purchases with a staggered payment structure in the ratio of 60:20:20 at closing, 12 months and 24 months, respectively.
The transaction values NOVELIC at an enterprise value (EV) of euro 64.5 million on a pre-money basis and euro 75 million on a post-money basis, with an implied valuation multiple of 26 times CY22 Estimated PAT. The transaction is expected to close by the end of Q4 FY23 and is subject to customary closing conditions.
Vivek Vikram Singh, MD & Group CEO of Sona Comstar, said: "I am excited to welcome NOVELIC to the Sona Comstar family. With this acquisition, we have added market-leading in cabin radar-sensing technology to our technology offering.
Increasing vehicle autonomy and automation is an emerging technology revolution in our industry. As we had done with EVs in 2016, we are taking a meaningful early step in the direction of the Electrified Autonomous Vehicle or e-AV. NOVELIC adds the hardware and software capabilities to design integrated systems for autonomous driving, including AI and ML as well as ASIC experience, to what we already have in mechanical, electric and electronic abilities.
Sona BLW Precision Forgings (Sona Comstar) is one of the world's leading automotive technology companies. The company has emerged as a global supplier with nine manufacturing and assembly facilities across India, USA, Mexico and China. It is primarily engaged in designing, manufacturing and supplying highly engineered, mission-critical automotive systems and components to automotive OEMs.
The company's net profit rose 5% to Rs 92.5 crore in Q2 FY23 from Rs 88.2 crore in Q2 FY22. Revenue in the second quarter improved by 12% YoY to Rs 657.4 crore.
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