The shares of Samvardhana Motherson International shed approximately 2 percent and were trading at Rs 68.75 levels till the afternoon on Thursday. In the past six months, the stock has shed approximately 11 percent.
Motherson Sumi Systems is engaged primarily in the manufacture and sale of components to automotive original equipment manufacturers. In fact, it is one of the world’s largest manufacturers of components for the automotive industry.
In Q2FYY23, the company reported a total income of Rs 45,178.22 Crore which was an increase of 14 percent from Rs 39,484.49 in the same period a year earlier. Their net profits also increased to Rs 8,054.69 Crore up from Rs 6,315.83 Crore in Q2FY22.
Brokerage firm Motilal Oswal remains bullish on the stock and has a ‘Buy’ tag with a target price of Rs 95 per share which represents an upside of 38 percent from the current levels.
“We expect good growth across global businesses viz SMR (+17% CAGR over FY22-25E), SMP, (+11% CAGR), and PKC (+5.6% CAGR), despite factoring in the impact of commodity cost deflation,” said the brokerage firm.
In addition to that, the brokerage firm also highlighted that the company is going to benefit from global trends such as premiumization (increase by 10% to 200% across businesses), rising SUV mix (by 50% to 200% increase), and electrification (40% to over 7x increase).
Further, the supply chain is now gradually regaining its normalcy, after being disrupted by the covid 19 pandemic, leading to the normalisation of automotive production. This is reflected in global PV production growth of 28% YoY and an 11% QoQ in 2QFY23 and growth in CV production across geographies.
All these factors are expected to lead the stock to rally in the coming months. The company has a market capitalization of Rs 46,655 Crore and the promoters hold a 68.16 percent stake in the company having pledged 1.12 percent of it.
Written by Anoushka Roy
