Sona BLW Precision Forgings Ltd. (Sona Comstar) has signed an agreement to acquire 54% equity stake in NOVELIC, a Serbian Company founded in 2012.
NOVELIC is primarily into providing sensor based solutions for smart vehicles. Sona’s immediate objective is to use it’s own existing client relationships to ramp up NOVELIC’s ADAS (Advanced Driver Assistance Systems) solution.
- Sona is paying Euro 40.5 mn (apprx Rs 360 crore) to acquire 54% stake into the Company.
- Transaction is a mix of primary and secondary
- Consideration is staggered 60:20:20 payable at closing, 12 mnths and 24 mnths
- NOVELIC is valued at a pre-money Enterprise Value (EV) of Euro 64.5 mn and post-money EV of Euro 75.0 mn.
- It implies Euro 10.5 mn is primary and Euro 30 mn is secondary
- Transaction valuation is 26x CY22 estimated PAT
- NOVELIC’s historical financial performance (Euro Mn)
- CY 2020: Revenues 3.8, PAT 0.9
- CY 2021: Revenues 6.1, PAT 1.7
- CY 2022 estimated: Revenues 9.3, PAT 2.5
- NOVELIC will continue to be run by it’s existing founder management, who will also hold the balance 46% stake.,
It seems an interesting acquisition going by the emerging trends in the auto industry; Current size though is very small.
ADAS market in 2020 was estimated at $ 12 bn and the same is expected to grow to $ 43 bn by 2030. NOVELIC’s current numbers in comparison therefore are insignificant.
A lot from hereon would depend upon Sona’s marketing capabilities.
Sona expects to scale up NOVELIC’s revenues to $100mn within 6-7 yrs, i.e., 10x of its CY22 revenues implying a projected CAGR of 40-45%.
This prima facie seems exciting. However, it’s what management expects. I will keep a watch.