Promoter selling shows no sign of slowdown in new year 2024 as Japan’s Sumitomo Wiring Systems looks to sell its entire 14.15 percent stake in Samvardhana Motherson soon, according to sources. At the current market cap of Rs 71,150 crore, the deal may be worth well over Rs 10,000 crore.
The Japanese firm has appointed Nomura as the investment banker for the stake sale, sources told Moneycontrol. "Nomura has been appointed as the banker to the deal and several mutual fund houses have been approached. Once Sumitomo Wiring Systems exits, it will remove a key overhang from the stock," said one of the persons cited above.
Another person added that the deal is likely to take place in the price range of Rs 110-120 per share. Discussions are at an early stage, he added. The last closing price of the stock was Rs 105.25.
Moneycontrol has reached out to Samvardhana Motherson and Nomura for a comment and the story will be updated as soon as we hear back. Meanwhile, Samvardhana Motherson has told CNBC-TV18 that the company doesn't comment on market speculation. At 1 pm on January 3, the stock was trading 3 percent lower at Rs 102 on the NSE.
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If the block deal fructifies in this quarter, then it will come exactly one year after Sumitomo's part stake sale in March 2023. At the time, Sumitomo had offloaded 3.4 percent stake in Samvardhana Motherson at Rs 70.1 apiece.
The stake sale was part of Sumitomo's global deleveraging strategy to fund partial debt prepayment in the rising interest environment. Societe Generale and Copthall Mauritius Investment were buyers in that transaction.
Analysts' outlook on Samvardhana Motherson
The auto component maker's Q2 FY24 performance was muted due to subdued growth in the US and EU markets. However, brokerages are largely bullish on the auto component maker and have 'buy' ratings on the stock.
"Receding cost headwinds and the realignment of capacities in developed markets will help improve efficiency going forward," Motilal Oswal had said after Q2 results.
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According to Emkay Research, cyclical recovery in global automotive production and higher wallet share from premiumisation and electrification will continue to drive a healthy 15 percent revenue CAGR over FY23-26E.
The company's Vision 2025 plan entails its consolidated revenue rising to $36 billion and a 40 percent return on capital employed. The company is marching towards this with a slew of acquisitions.
In October 2023, it announced three acquisitions valued at over Rs 380 crore in aerospace, health and medical sectors to strengthen its non-automotive businesses further. In July 2023, it had acquired 81 percent stake in Yachiyo, which houses Honda Motor’s four-wheeler component business. This was followed by an investment in Prysm Systems, a maker of touchscreen displays.
In 2022, Motherson Sumi Systems had demerged into Samvardhana Motherson and Motherson Sumi Wiring. Sumitomo Wiring Systems holds 14.15 percent in former and 25 percent in latter.
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