Samvardhana Motherson: Emkay Global Financial Reiterates BUY, Raises Price Target to Rs 130 on Strong Growth Outlook

Emkay Global Financial's research report highlights that Samvardhana Motherson International Limited (SAMIL) delivered a performance largely in line with expectations. Consolidated revenue grew by 8.5% year-on-year to Rs 301.7 billion (6% excluding Atsumitech), while EBITDAM stood at 8.7%, slightly down from 8.8% YoY. Profit After Tax (APAT) was Rs 7.3 billion, modestly below expectations.

Management provided constructive commentary, expecting a strong second half of fiscal year 2026 (H2FY26) supported by greenfield ramp-up, completion of platform transitions across Original Equipment Manufacturers (OEMs), and healthy new order inflows. Restructuring initiatives in the European Modules and Polymer segments are nearing completion, and the Consumer Electronics and Aerospace divisions are scaling up effectively. Notably, the Aerospace segment has been empanelled as a Tier-1 supplier to Airbus, securing a USD 3 billion order book.

Emkay Global Financial forecasts a consolidated revenue, EBITDA, and Earnings Per Share (EPS) Compound Annual Growth Rate (CAGR) of 9%, 10%, and 21% respectively, over FY25-28E. While FY26E EPS has been trimmed slightly due to gradual expectations for greenfield ramp-up and margin normalization in emerging businesses, EPS for FY27E and FY28E remains largely unchanged.

Impact

This report is likely to be viewed positively by investors, potentially leading to increased investor confidence and a favorable market reaction for Samvardhana Motherson shares. The clear outlook and strategic growth drivers identified by the analyst suggest potential upside for the stock, reinforcing the BUY recommendation.

Rating: 8/10

Difficult Terms Explained:

• EBITDAM: This stands for Earnings Before Interest, Taxes, Depreciation, Amortization, and exceptional items/rent. It's a way to measure a company's operational profitability before considering financing, tax, and accounting decisions.
• APAT: This means After Profit After Tax. It represents the net profit a company has earned after all expenses, taxes, and interest have been deducted. It's the profit available to shareholders.
• OEM (Original Equipment Manufacturer): These are companies that manufacture products but sell them under another company's brand name. For example, a company that makes car parts for Ford.
• CAGR (Compound Annual Growth Rate): This is the average annual growth rate of an investment or business metric over a specific period longer than one year, assuming profits are reinvested.
• PER (Price-to-Earnings Ratio): A valuation metric that compares a company's stock price to its earnings per share. A higher PER can indicate that investors expect higher growth in the future.
• Greenfield ramp-up: This refers to the process of increasing production or operations in a new facility that has been built from scratch.
• Platform transitions: In the automotive industry, this means changing over to new technological or manufacturing bases for components or vehicles, often required by car manufacturers.
• Consumer Electronics: This category includes devices like smartphones, computers, televisions, home appliances, and other electronic gadgets for personal use.
• Aerospace: This field involves the design, development, manufacturing, and operation of aircraft and spacecraft.
• Tier-1 supplier: A company that supplies products or components directly to the main manufacturer (OEM) of a product, rather than supplying to another supplier.