Nomura Recommends 'Buy' on Sona BLW, eClerx, IOCL with Up to 25% Upside Potential

Global brokerage firm Nomura has turned optimistic on select Indian stocks across auto components, information technology (IT), and oil refining sectors, issuing 'Buy' ratings with significant upside potential.

**Sona BLW Precision Forgings** received a 'Buy' rating with a target price of Rs 605, indicating a 25% potential upside. Nomura believes the company is well-positioned to gain from the restructuring of auto component supply chains in Europe, with an opportunity size of around EUR 300 million. The brokerage also noted diversification in revenue streams and a reduced dependency on its largest EV customer. However, near-term challenges like chip shortages and production disruptions at a customer's plant were acknowledged.

**eClerx Services** was reiterated with a 'Buy' rating and a target price of Rs 5,200, suggesting an 8.6% upside. Nomura forecasts strong dollar revenue growth of 17-18% YoY for FY26-FY28, driven by robust deal wins and a strong pipeline. The company's EBITDA margin of 27% in Q2 exceeded expectations, partly supported by Indian Rupee depreciation against the US Dollar. While some margin moderation is expected in the near term, margins are projected to stabilize between 24-28%.

**Indian Oil Corporation (IOCL)** received a 'Buy' rating with a target price of Rs 160, implying a 6.7% upside. Nomura highlighted that IOCL's Q2FY26 performance significantly surpassed estimates, primarily due to much better-than-expected refining margins. The core refining margin was $8.9/bbl, well above Nomura's estimate and at a premium to the benchmark Singapore GRM.

**Impact** This news is likely to create positive sentiment around Sona BLW Precision Forgings, eClerx Services, and Indian Oil Corporation, potentially driving their stock prices upwards. Investors looking for opportunities in these sectors may consider these recommendations. Impact Rating: 7/10

**Explanation of Difficult Terms:** * **Brokerage Firm:** A financial company that facilitates the buying and selling of securities on behalf of clients. * **Upside Potential:** The projected increase in a stock's price from its current trading level to its target price, expressed as a percentage. * **Supply Chain Restructuring:** The process of reorganizing and optimizing the flow of goods and services from production to consumption, often in response to market changes. * **Traction Motors:** Electric motors designed to provide the motive power for vehicles. * **EV Customer:** A client who purchases or uses electric vehicles. * **Chip Shortages:** A global deficit in the supply of semiconductor chips, which are crucial components for electronics. * **Deal Momentum:** The rate at which new contracts and business agreements are secured by a company. * **Margin Discipline:** The practice of maintaining profit margins within a specified range, even when facing fluctuating costs or market conditions. * **EBITDA Margin:** A profitability ratio that measures a company's operating performance before accounting for interest, taxes, depreciation, and amortization expenses, calculated as a percentage of revenue. * **Quarter-on-Quarter (QoQ):** A comparison of financial or operational metrics between two consecutive financial quarters. * **Year-on-Year (YoY):** A comparison of financial or operational metrics between a specific period and the same period in the preceding year. * **Rupee Depreciation:** A decline in the value of the Indian Rupee against other major currencies, such as the US Dollar. * **Refining Margins:** The profit earned by oil refineries from processing crude oil into finished products like gasoline, diesel, and jet fuel. * **Benchmark:** A standard or point of reference used for comparison. * **GRM (Gross Refining Margin):** The difference between the total value of refined petroleum products and the cost of the crude oil and other inputs. It indicates refinery profitability.