Samvardhana Motherson International Ltd. share price target

Samvardhana Motherson (SAMIL) has entered into an agreement with Honda Motors to acquire 81% stake in Yachiyo Industry's 4W component business (Honda group currently owns 51% stake in it and is a publicly listed entity) for an equity consideration of Euro145mn, with the entity being net cash.

Samvardhana Motherson International’s (SAMIL) Q4FY23 EBITDA margin at 9% is up 120bps QoQ, and is higher than the consensus estimate of 8.1%. This was driven by gradual recovery in the gross margin (GM), operating leverage benefits and partial cost pass-through to customers.

Samvardhana Motherson International (SAMIL) has reached an agreement to acquire 100% equity stake in SAS Autosystemtechnik GmbH from Faurecia for an enterprise value of EUR540mn. SAS is a leading global provider of cockpit module assemblies for cars with manufacturing facilities/offices across 12 countries with a total headcount of ~5,000.

Samvardhana Motherson International’s (SAMIL) Q3FY23 EBITDAM at 7.8%, flat QoQ, was in line with our estimate though revenue growth in EUR terms at ~4% QoQ was a positive surprise in a quarter with fewer production days.

Samvardhana Motherson International (SAMIL) is targeting to treble its revenue to US$36bn in next 3-4 years through a mix of organic and inorganic growth with 25% of
the revenue mix aimed to come from the non-auto segment (currently it is sub-3%).

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...