The shares of Samvardhana Motherson dropped nearly 2 percent on October 8 after luxury carmaker BMW cut its 2025 earnings forecast due to weak sales in China and tariff costs.
Samvardhana Motherson derived 5 percent of its 2024 revenue from the German carmaker.
Why Samvardhana Motherson shares fell after BMW's guidance cut?
BMW was Samvardhana Motherson's fifth largest customer in terms of revenue during the fiscal year 2024, after Mercedes Benz, Audi, Volkswagen and Maruti Suzuki. Hence, the guidance cut by the foreign company may have dampened the investor spirit for the stock.
BMW said that it now sees pretax group earnings slightly lower in 2025 compared to last year. This is lower than the previous expectation of an on-par earnings. The automaker also slashed its projection for automotive free cash flow.
BMW now expects free cash flow of above €2.5 billion ($2.9 billion), down from its earlier estimate of more than €5 billion. It also narrowed its profit margin expectations for automotive business to 5-6 percent, from 5-7 percent.
This comes as the German automakers face strong competition from Chinese brands like BYD. BMW said that while sales had risen in Europe and the US in January-September, sales in China were below expectations.
Samvardhana Motherson share price history:
Samvardhana Motherson shares were trading at around Rs 102 apiece. The stock has fallen nearly 4 percent in the past five days, but gained nearly 4 percent in the past one month. The stock has risen more than 33 percent in the past six months, but fell nearly 25 percent in the past one year.
Its P/E ratio currently stands at around 35. After hitting a 52-week high of Rs 143.91 apiece in October last year, the stock dropped more than 50 percent to hit a 52-week low of Rs 71.50 apiece in April this year. The stock has now recovered nearly 43 percent since then.
(With inputs from the agencies)
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