Brokerage firm Motilal Oswal has maintained its 'Buy' rating on SPR Auto Technologies with a target price of Rs 6,150, following strong second-quarter revenue growth. While the company is expanding rapidly through acquisitions and a recent Rs 10 billion capital raise, investors are tracking margin pressure caused by a shift in the product sales mix.
Motilal Oswal has reaffirmed a 'Buy' rating on SPR Auto Technologies, setting a target price of Rs 6,150. The brokerage’s outlook is based on an earnings forecast for September 2028, reflecting confidence in the company’s ongoing transition from a traditional piston manufacturer to a broader, technology-driven mobility platform.
The company’s latest quarterly performance for the second quarter of the 2027 financial year showed significant expansion. Consolidated revenue grew by over 60% year-on-year to reach Rs 16.75 billion, while net profit rose by 14.1% to Rs 1.62 billion. This revenue surge was primarily supported by strong demand from original equipment manufacturers (OEMs).
Despite the growth in sales, profitability margins experienced some pressure. The company reported an EBITDA margin of 17.9% for the quarter, lower than the 22.4% reported in the same period last year. According to market analysis, this margin compression is mainly due to a shift in the sales mix. The company has been selling more products to large vehicle manufacturers, which typically carry lower margins, compared to its traditional, higher-margin aftermarket business.
To fund its pivot toward a powertrain-agnostic mobility platform, SPR Auto Technologies recently completed a qualified institutional placement, raising Rs 10 billion in August 2026. This move is designed to provide the necessary cash buffer for both organic growth and acquisitions. The company has been actively acquiring businesses, such as Antolin, Takahata, TGPEL, and EMFi, to diversify its product portfolio beyond its core piston business.
While the expansion strategy is intended to position the company for long-term growth, it brings certain challenges that investors should consider. The strategy of aggressive acquisition has led to increased debt, with the debt-to-equity ratio reported at 0.59x in the previous financial year. This higher use of borrowings, combined with integration risks associated with merging multiple new business units, could affect financial performance if not managed efficiently.
Furthermore, the automotive sector remains sensitive to macroeconomic factors. Potential volatility in raw material costs, the risk of a global economic slowdown impacting vehicle demand, and currency fluctuations are persistent sector headwinds that could influence future earnings. The company’s ability to manage these costs while scaling its new businesses will be a key factor in its financial health. Moving forward, the most important updates for investors will be the company’s ability to improve profit margins, integrate its recent acquisitions successfully, and manage its debt obligations while maintaining steady demand from its manufacturing clients.