Shares of this large-cap auto ancillary stock jumped up to 3 percent in Wednesday’s trading session after the company incorporated an indirect wholly-owned subsidiary in the United States for the purpose of holding industrial assets of the company. In the past six months, the company’s stock has gained nearly 40 percent.
With a market capitalization of Rs 64,733.85 crores, the stocks of Samvardhana Motherson International Limited started their trading session on Wednesday at Rs 93.99 and currently trades at Rs 95.50. The company’s scrip witnessed an intra-day high price of Rs 96.20 indicating a gain of around 3 percent as compared to the previous close of Rs 93.32 apiece.
Such bullish sentiments were observed after the company, through a regulatory filing with the Bombay Stock Exchange (BSE) dated 10th October 2023, intimated that it has incorporated an indirect wholly-owned subsidiary (WOS) in the United States named “Motherson Groups Investments USA Inc.” (MI-USA).
With the incorporation date being October 5th, 2023, the formation of MI-USA appeared on the Delaware online system on October 9th, 2023. The newly incorporated company will acquire, invest as well as hold the movable and immovable assets of the group.
During the recent financial years, the prime business indicators such as the operating revenues as well as net profits showed decent improvements with the former increasing from Rs 63,774 crores during FY21-22 to Rs 78,700.7 crores during FY22-23, and, the latter, keeping the timeframe the same, moved up from Rs 817.3 crores to Rs 1,669.6 crores.
Due to the same, the well-known profitability ratios such as the return on equity (RoE) and the return on capital employed (RoCE) showed positive movements with the RoE shifting from 4.93 percent during FY21-22 to 7.76 percent during FY22-23, and, the RoCE, during the same time period, increasing from 6.95 percent to 9.37 percent.
Having a glance at the price-to-earnings (P/E) ratio of the company, it exhibits characteristics of an “undervalued” stock since the P/E of the company stands at 32.29 which is way less than the P/E of the industry, i.e., 37.44.
The shareholding data, as per the quarter ended June 2023, showcases the company’s Promoters holding a 64.77 percent stake, and the Foreign Institutional Investors (FIIs) holding a 10.83 percent stake in the company.
Incorporated in 1986, Samvardhana Motherson International Limited is engaged in the business of manufacturing as well as selling components for automotive equipment within and outside India. The company offers camera-based detection systems, interior & exterior mirrors, engineering solutions, etc.
Written by Amit Madnani
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