The company is one of the largest and fastest-growing automotive OEM suppliers in the world. It is a diversified global manufacturing expert and is one of the top 25 global automotive suppliers.
Samvardhana Motherson International has a 24 percent global market share in the manufacture of exterior mirrors for passenger cars, commercial vehicles, and heavy trucks and is a leading specialist in the automotive industry for camera-based sensing systems.
The Group is India’s biggest manufacturer of wire harnesses for passenger automobiles, with a 40% market share. Samvardhana Motherson International shares have gained 65 percent in the last six months and 93 percent in a year.
Financial reports show that operational revenue surged by 20 percent, rising from Rs 22,517 crore in Q4FY23 to Rs 27,058 crore in Q4FY24, with net profit soaring by 106 percent from Rs 699 crore to Rs 1,444 crore during this period.
Additionally, the company achieved a consolidated Return on Capital Employed (ROCE) of 17% for FY24, marking a significant improvement compared to 11% in FY23, showcasing a steadfast commitment to ongoing enhancement efforts.
Citi, a prominent brokerage firm, has revised its recommendation on Samvardhana Motherson International, downgrading it to a “sell” from its current price of ₹153 to ₹85, indicating a 44 percent decrease.
CLSA also downgraded the stock from ₹130 per share. This decision was influenced by their view that the stock is overvalued and anticipates a slowdown in the European auto industry.
Contrary to this, Jefferies has upgraded the stock’s price target from ₹135 to ₹175 per share, while Morgan Stanley has raised its target to ₹176 per share. Jefferies values Samvardhana Motherson at 21 times the financial year 2025 PE, and though they acknowledge it’s not cheap, they believe its strong growth prospects will sustain it.
Additionally, Jefferies has increased its earnings per share (EPS) estimates for FY2025 and FY2026 by 8% and 9% respectively. They note a significant EPS growth over FY22-24 and foresee a 32% CAGR over FY24-27.
The brokerage firm predicts that the integration of acquisitions will drive robust earnings growth in FY2025 and FY2026. Management highlights that emerging markets are propelling growth, with a ₹5,000 crore FY25 capex plan, including ₹2,000 crore for 18 greenfield plants.
Morgan Stanley, maintaining an ‘Overweight’ rating, has raised its target to ₹176 from ₹133. They anticipate additional earnings support from acquisition integration, non-auto growth, and balance sheet improvements, expressing increased confidence in an earnings turnaround and a potential re-rating.
Written by Omkar Chitnis
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