Samvardhana Motherson International Ltd. share price target

Samvardhana Motherson International’s (SAMIL) Q2FY23 EBITDA margin at 7.7%, up 160bps QoQ, was a positive surprise led by 180bps QoQ reduction in manpower cost, as start-up cost for new facilities was included in the base of Q1FY23.

Samvardhana Motherson International’s (SAMIL) EBITDA margin at 6.1%, down 90bps QoQ, was a slight miss on our estimate of 6.3%, largely due to gross margin impact (down 40bps QoQ).

Background: Motherson Sumi Systems Limited (MSSL) is one of the world's leading, specialized automotive component manufacturing companies for OEMs. MSSL was established in 1986 as a joint venture with Sumitomo Wiring Systems. With a diverse global customer base of nearly all leading automobile manufacturers globally, the company has a presence in 36 countries across six continents. MSSL is currently the largest auto ancillary in India and among the Fab SO companies of India. As a part of re-organization strategy, MSSL has de-merged its Domestic Wiring Harness (DWH) business into a separate entity named as Motherson Sumi...

Motherson Sumi Systems Ltd (MSSL) is a JV between Samvardhana Motherson International (SMIL) and Sumitomo Wiring Systems, Japan (SWS). MSSL is a diversified auto parts maker with presence in automotive...

erstwhile SAMIL into MSSL at | 255/share on SOTP basis. Consequently, our target for individual entities i.e. DWH and new SAMIL (ex-DWH) is at | 70/share and | 185/share, respectively. Given the high RoCE profile (~40%) and exposure to pure play domestic PV wiring harness segment at DWH, we assign a premium valuation...