Samvardhana Motherson Stock Set for Rocket Launch? YES Securities Bets Big with ₹139 Target!

YES Securities has maintained a positive outlook on Samvardhana Motherson International, reiterating its 'Buy' rating and increasing the target price to ₹139 per share. This valuation is based on 25 times the projected earnings per share for March 2028.

Analyst Optimism

• The brokerage firm's confidence stems from Samvardhana Motherson's resilient performance in the first half of fiscal year 2026 (H1FY26).
• This resilience is attributed to a stable booked business and minimal impact from US tariffs, with ongoing discussions for tariff pass-through.
• YES Securities forecasts revenue, Ebitda, and PAT to grow annually at a compound annual growth rate (CAGR) of 9.5% to 14%.

Robust Growth Drivers

• The company's growth outlook remains strong, supported by new program introductions, increased content per vehicle, expansion of greenfield capacities, and growing contributions from non-automotive segments.
• The total booked business remained stable, standing at $87.2 billion as of September 2025.
• Contributions from non-automotive segments are increasing, reaching approximately $3 billion in September 2025.

Non-Auto Expansion

• Non-automotive sectors are identified as key growth pillars for Samvardhana Motherson.
• In consumer electronics (CE), two plants are operational, with the largest plant's start of production scheduled for Q3FY27.
• CE revenues saw a significant 36% quarter-on-quarter growth in Q2 and are expected to accelerate further.
• In the aerospace sector, revenues grew by 37% year-on-year in H1FY26.
• The company is developing numerous unique aircraft parts and serves major players like Airbus and Boeing.

Diversification and Resilience

• Samvardhana Motherson has achieved a significant milestone by deriving over 50% of its revenues from emerging markets as of FY25.
• The company is strengthening its presence in high-growth regions including India, Mexico, China, Japan, and broader Asia.
• This strategic diversification across products, customers, and geographies enhances the company's earnings stability and positions it well for future growth.

Core Business Strength

• Significant growth opportunities persist within the company's core automotive component businesses.
• The wiring harness division has substantial outsourcing opportunities, particularly for large applications in rolling stock and aerospace cockpits.
• The vision systems division is vertically integrated and has introduced new products like camera monitoring systems for EVs and advanced mirrors.
• Acquisitions in the modules and polymers segment are expected to bolster product capabilities and increase content per vehicle.

Impact

• This positive analyst report could boost investor confidence in Samvardhana Motherson International, potentially leading to increased buying interest and a positive stock price movement.
• It highlights the company's strategic diversification and growth initiatives, which could serve as a model for other auto component manufacturers.
• Impact Rating: 8/10

Difficult Terms Explained

• EPS (Earnings Per Share): A company's net profit divided by the number of its outstanding common shares.
• Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance.
• PAT (Profit After Tax): The profit remaining after all expenses and taxes have been deducted.
• CAGR (Compound Annual Growth Rate): The average annual growth rate of an investment over a specified period longer than one year.
• SOP (Start of Production): The point in time when a manufacturing process officially begins producing goods.
• MRO (Maintenance, Repair, and Operations): Goods and services used to maintain and repair manufacturing equipment and facilities.
• OEM (Original Equipment Manufacturer): A company that manufactures products based on designs supplied by another company.
• CE (Consumer Electronics): Electronic products intended for everyday use by consumers.
• EV (Electric Vehicle): A vehicle powered partly or fully by electricity.
• SUV (Sport Utility Vehicle): A type of car combining road-going car capabilities with features associated with off-road vehicles.
• CMS (Camera Monitoring Systems): Systems that use cameras to monitor surroundings, often in vehicles.