Samvardhana Motherson stock soars 4.5% after robust Q1 earnings, target price upgrades

According to Morgan Stanley, Samvardhana's balance sheet is poised for improvement as all acquisitions have been completed.

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26 Aug, 2025 12:21

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Samvardhana Motherson International Ltd's shares rose as much as 4.5 percent to Rs 188.80 in early trade on August 14, after the company reported a strong performance for the quarter ended June. The company's strategic investments and successful expansion efforts garnered positive reviews from brokerage firms such as JPMorgan, Morgan Stanley, and Nuvama.

Both Morgan Stanley and JPMorgan maintained their bullish stance on the stock and raised their target prices as well. Samvardhana's consolidated net profit for the June quarter rose over 69 percent on year to Rs 1,097.18 crore, driven by revenue growth. Total revenue from operations rose 28.5 percent to Rs 28,867.96 crore.

At 9.20 AM, Samvardhana's shares traded 3.8 percent higher at Rs 186. The stock has gained over 63 percent in the past six months, outperforming the Nifty 50 which gained 10 percent during the same period.

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Morgan Stanley reiterated its 'Overweight' call on Samvardhana and raised its target price for the stock to Rs 198 per share. The firm noted that Q1 EBITDA was largely in line with expectations. EBITDA of Samvardhana surged 44 percent YoY to Rs 2,780 crore, driven by better gross margins. The EBITDA margin expanded by 100 basis points to 9.6 percent.

According to Morgan Stanley, the company's balance sheet is poised for improvement as all acquisitions have been completed. The brokerage firm said that the ramp-up of Samvardhan's non-auto business and further details on its consumer electronics segment will be key to monitorables.

JPMorgan echoed a similar sentiment. The brokerage also had an 'Overweight' rating on Samvardhana and a target price raised to Rs 195 per share. JPMorgan has also raised its EPS estimates for FY25-27 by 9-19 percent.

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Nuvama is optimistic about Samvardhana's future given the company's robust management, strategic acquisitions, substantial order backlog, and rising content due to premiumisation trends. The firm forecasts a revenue and EBITDA compound annual growth rate (CAGR) of 9 percent and 15 percent respectively from FY24 to FY27 while maintaining its 'Buy' rating on the stock.

In a post-earnings conference call Samvardhana said that the company plans to invest Rs 2,600 crore in consumer electronics over the coming years, including electronics assembly. The company's net debt (excluding lease liabilities) rose by Rs 3,000 crore quarter-on-quarter to Rs 13,369.9 crore, driven by acquisition costs of Rs 1,750 crore and increased working capital, which is expected to stabilise in the second half of FY25. The company said that it is advancing 19 greenfield projects, with 13 in India, 4 in China, and 1 each in Poland and Mexico. Samvardahana's capital expenditure for Q1FY25 was approximately Rs 1,080 crore, with a planned total of Rs 5,000 crore for FY25.

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