Samvardhana Motherson International shares, along with other auto players' stock prices, plunged almost four percent in early trade on September 11, following a downward revision of BMW Group’s 2024 guidance.
As BMW contributes around five percent to Samvardhana Motherson's topline, the market reacted to the news negatively.
At 10.50 am, the auto player's shares were lower by 2.8 percent at Rs 184.24 on the NSE, compared to the previous session's close.
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BMW Group's downward revision was triggered in part by additional headwinds in the Automotive Segment resulting from delivery stops and technical actions linked to the Integrated Braking System (IBS) that is provided to the BMW Group by a supplier.
"In parallel to this effect, the ongoing muted demand in China is affecting sales volumes. Despite stimulus measures from the government, consumer sentiment remains weak," said the auto major in a release. Overall, BMW Group said its earnings before tax will decrease significantly.
The BMW Group said it will see a slight decrease in deliveries versus previous year. Additionally, its EBIT margin will fall between the six-seven percent range, as compared to the 8 to 10 percent range as indicated earlier. The auto giant's return on capital employed (RoCE) will come in between 11 percent and 13 percent, as against previously guided range of 15 percent to 20 percent.
Samvardhana Motherson is likely to raise $1 billion through a Qualified Institutional Placement (QIP), reported CNBC TV18, citing unidentified sources. The QIP by the auto components maker is likely to be launched soon, and the proceeds may be utilised either for an acquisition or to reduce its existing debt, the report said.
The company has appointed bankers for the likely QIP and the roadshow may begin soon. As per report, Samvardhana Motherson is looking to reduced debut to 1x EBITDA against 1.5X at present.
The company's gross debt stood at Rs 20,114 crore and net debt at Rs 13,370 crore, as of the first quarter in the current fiscal. It's gross debt increased by 16 percent and net debt by 29 percent on a sequential basis in June quarter.
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