In the last three months, shares of Samvardhana Motherson have gained over 22 per cent while the BSE Sensex has gained just 6 per cent in the same period.
Samvardhana Motherson International, India’s largest automotive component manufacturer, has witnessed a surge in its shares, with an impressive increase of over 36% in the last year and more than 25% year-to-date. This surge is attributed to the company’s additional acquisitions, following a remarkable streak of 15 successful acquisitions within the past 12 months.
Over the past three months, Samvardhana Motherson’s shares have recorded a notable increase of over 22%, outperforming the BSE Sensex, which has seen a comparatively modest gain of just 6% during the same period.
The upcoming acquisitions align with Motherson’s ambitious target of achieving $36 billion in revenue by 2025, coupled with a robust return on capital employed (ROCE) of 40%. Currently boasting a booked business exceeding $77 billion, up from $69 billion reported in March 2023, Motherson is poised for strategic expansion.
SAMIL’s growth strategy extends to emerging markets such as India and China, where the company is establishing 11 greenfield and brownfield plants. These facilities, catering to both automotive and non-automotive sectors, are set to come online this year and the next.
In support of capacity expansion initiatives by its OEM partners, SAMIL is revising its full-year capital expenditure (capex) guidance upward by 50%, now totaling about Rs 4,500 crore. The company’s net debt to EBITDA ratio stands at 1.9, well within its financial policy target of 2.5.
While SAMIL pursues its deleveraging path, the recent acquisitions, including the Rs 1,073 crore acquisition of Germany-based Dr Schneider Group and the Rs 4,790 crore acquisition of SAS Autosystemtechnik, signify a strategic shift toward large-ticket deals.
Brokerage firms remain optimistic about SAMIL’s prospects, with Motilal Oswal Financial Services maintaining a buy call on the stock and a target price of ₹115, implying a 20% upside potential. Kotak Institutional Equities, rating the stock as ‘add,’ has slightly raised the target price to ₹105 from ₹100, citing expectations of higher revenue growth and a steady recovery in global automotive volumes.
Source:financialexpress.com