Synopsis:
The auto components company targets $108 billion in revenue by FY2030 with diversified global operations and 40% RoCE. Brokerages are positive, citing steady Q1 growth, capex for greenfields, cost-saving measures, and acquisitions, though aggressive targets pose execution challenges.
The Auto Components & Equipment sector surged to a turnover of $80.2 billion in FY25, achieving 9.6% year-on-year growth, with exports and domestic demand driving expansion. The segment is propelled by robust vehicle production, electrification, and advanced tech adoption, set to contribute up to 7% of India’s GDP by 2026.
With a market capitalization of Rs 1.03 lakh crore, the shares of Samvardhana Motherson International Ltd were trading at Rs 98.38 per share, increasing around 4 percent as compared to the previous closing price of Rs 94.60 apiece.
Future Outlook
Samvardhana Motherson unveiled an ambitious five-year plan targeting $108 billion in revenue by FY2030, over four times its previous figure, and aims to double RoCE to 40%, reflecting a strong focus on profitability and efficient capital utilization.
The company plans a diversified global footprint, keeping no country above 10% of revenue, with over 75% of growth expected from recent acquisitions. It also intends to list more group entities and maintain a dividend payout of up to 40%, while tariffs are unlikely to impact operations materially.
Brokerage Recommendation
InCred, one of the well-known brokerages in India, has upgraded to an ‘add’ rating on the auto stock with a target price of Rs 117 apiece, indicating a potential upside of 24 percent from the previous closing price of Rs 94.6 per share.
A brokerage cautioned that Samvardhana Motherson’s ambitious plan to quadruple sales over five years seems stretched. While RoCE has improved to the high teens, it remains well below the management’s 40% target. Achieving this higher RoCE will be critical for creating shareholder value and validating the company’s aggressive growth projections.
Moreover, JPMorgan and Jefferies rated the stock positively, issuing “overweight” and “buy” ratings with target prices of Rs 105 and Rs 110, signaling strong growth expectations and investor confidence.
The company reported a modest 5% growth in Q1FY26, with revenue rising to Rs 30,212 crore from Rs 28,868 crore and net profit decreasing to Rs 606 crore from Rs 1,097 crore. This steady performance reflects consistent operational stability amid a competitive market environment.
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The company is addressing European structural challenges through a EUR 50 mn cost-saving plan, booking Rs 136 cr in Q1 FY26 for restructuring, with benefits expected in Q3/Q4. Early-stage acquisitions like Atsumitec are yet to deliver synergies, while US tariff impacts remain minimal, managed via compliance and pass-through mechanisms.
The company maintained FY26 capex guidance at Rs 6,000 crore, evenly split between growth and maintenance, with Q1 spending at Rs 1,200 crore. Three greenfield units are operational, while 11 more are underway, targeting emerging markets and non-auto segments. Initial start-up costs impact margins, but ramp-up is expected to boost H2 profitability.
Samvardhana Motherson International Limited has a diversified product portfolio, which includes electrical distribution systems, fully assembled vehicle interior and exterior modules, automotive rear vision systems, moulded plastic parts and assemblies, injection moulding tools, moulded and extruded rubber components, lighting systems, electronics, precision metals and modules, Industrial IT solutions and services, and technologies, such as telematics and others.
Written by Abhishek Singh
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