The stocks of this auto ancillary stock jumped up to 10 percent to reach its 52-week high levels today. From the price levels at the start of January, the scrip has gained more than 15 percent.
Shares of Samvardhana Motherson International Limited (SAMIL) are currently trading at Rs 90.25. The scrip witnessed intra-day high levels of Rs 93.65, which is also the 52-week high mark, indicating a gain of 10 percent compared to the previous closing levels of Rs 85.15. It has a market capitalization of Rs 61,000 crores.
One of the probable reasons for the stock prices to surge is after the company, through a regulatory filing with the Bombay Stock Exchange (BSE) dated 4th July 2023, announced that Samvardhana Motherson Automotive Systems Group BV (SMRP B.V.), a wholly-owned subsidiary of SAMIL, has entered into an agreement with ‘Yachiyo’, a subsidiary of Honda Motor Company Limited, to acquire an 81% stake in the latter’s four-wheeler (4W) business.
Currently, Honda Motors own 50.4 percent of Yachiyo. Post the acquisition, Motherson will be forming an 81 percent : 19 percent strategic partnership with Honda Motors where both parties will strive hard for a strong and sustainable future of the company.
In the past couple of years, the company has been successful in improving its financial performance with an increase in basic parameters such as operating revenues and net profits. The former moved from Rs 63,536 crores during FY21-22 to Rs 78,700 crores in FY22-23, and, the latter, keeping the timeframe the same, more than doubled from Rs 801 crores to Rs 1,713 crores.
Moreover, the profitability ratios were on the rise with the return on equity (ROE) increasing from 4.24 percent during FY21-22 to 6.66 percent in FY22-23, and the return on capital employed (ROCE) taking a shift from 5.88 percent to 9.69 percent.
Samvardhana Motherson International Limited is a global player providing system solutions to various customers present in automotive and many other industries. The company has a diversified product portfolio, some of which include moulded plastic parts, electrical distribution systems, electronics, etc.
Written by Amit Madnani
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