Sonasid: BKGR Raises Buy Recommendation with 35.5% Upside Potential

BKGR has raised its recommendation on Sonasid from 'Accumulate' to 'Buy' with a target price of 2,845 DH, representing a potential upside of 35.5%.

The broker believes that 2025 marks a turning point for the steelmaker, with a 17% increase in volumes, improved margins, and a 74% increase in EBITDA.

Sonasid has launched a new 2026-2030 strategic plan worth 1.5 billion DH, aimed at developing high-value-added activities: recycling, copper, aluminum, automotive steel, and pre-stressed toron.

The research department estimates that the group is becoming increasingly resilient due to the diversification of its product mix and the growth of non-ferrous activities.

Despite the new investment cycle, Sonasid is expected to maintain an attractive dividend policy with a 3.1% expected yield in 2026.

BKGR considers 2025 to be a 'true milestone' for Sonasid, with a 17% increase in sales volumes, full utilization of industrial capacity, and a significant improvement in margins, which rose to nearly 10% from 7% in 2024.

The same source believes that these performances reflect both a buoyant domestic market and the successful implementation of the previous 2021-2025 strategic plan.

Sonasid is now entering a new phase of development through a global investment program of 1.5 billion DH over 2026-2030.

The goal is to transform the group's profile and improve the quality of its product mix, rather than simply increasing volumes.

Management aims to achieve an EBITDA of around 1 billion DH by 2030, up from 608 million DH in 2025.

This trajectory is based on the development of new high-value-added segments, including pre-stressed toron, automotive steel, recycling, and activities related to copper and aluminum.

BKGR also notes that by 2030, around 40% of the target EBITDA is expected to come from new growth drivers, while the contribution of steel to revenue is expected to be around 60%, down from 40% for non-ferrous activities.

For BKGR, this strategy should enable Sonasid to gradually reduce its dependence on standard segments and better absorb the historical cyclicality of the steel sector.

However, the group will remain exposed to several structural variables, including domestic demand, steel prices, and input volatility.

The research department believes that the growth of high-value-added products, combined with operational gains, should improve the group's margin profile in the long term.

In its projections, BKGR expects revenues of 6.7 billion DH in 2026 and 7.17 billion DH in 2027, up from 6.39 billion DH in 2025.

By 2030, revenues could reach 9.2 billion DH, representing a 7.6% annual growth rate over 2025-2030.

The note highlights the significant improvement in profitability.

In 2025, EBITDA surged 74.2% to 608 million DH, with an EBITDA margin of 9.5% compared to 6.4% in 2024.

BKGR attributes this improvement to a positive margin effect of 268 million DH, a better product mix, and industrial gains.

The net profit growth (RNPG) increased by 93% to 272 million DH in 2025, bringing the net margin to 4.3% compared to 2.6% in 2024.

For 2026, BKGR forecasts a RNPG of 335 million DH, up 23.2%, and 365 million DH in 2027.

The net margin is expected to reach around 5% over the two years.

Sonasid maintains a solid financial situation, according to BKGR, despite a decline in net cash due to increased working capital needs and the launch of the new investment cycle.