Buy Samvardhana Motherson; target of Rs 114: Motilal Oswal

Motilal Oswal's research report on Samvardhana Motherson

We attended the SAMIL Analyst Meet, where management elaborated on its Vision 2030 targets. Its key performance highlights over the past five years include: 1) 3x growth in EBIT and 4.7x growth in PAT; 2) RoCE improved to 18.4% from 10.5% in FY20; and 3) net debt/EBITDA stands at 0.9x (the lowest in a decade). While SAMIL has fallen short of its five-year target, its performance remains commendable when viewed in the context of the significant headwinds faced during this period. The company has set a revenue target of USD108b for FY30, with other parameters expected to remain stable. In its core business, SAMIL aims to leverage synergies from 23 recent acquisitions and turn around 70 red units inherited through these acquisitions.

Outlook

Hence, despite the global headwinds, reiterate our Buy rating on SAMIL with a TP of INR114 (based on 24x June-27E EPS) given its significant growth opportunities going forward.