Buy Samvardhana Motherson; target of Rs 130: Emkay Global Financial

Emkay Global Financial' research report on Samvardhana Motherson

Samvardhana Motherson (SAMIL) delivered a largely in-line performance, with consol revenue up 8.5% YoY (6% ex-Atsumitech) to Rs301.7bn, with EBITDAM at 8.7% (vs 8.8% YoY), while APAT at Rs7.3bn was modestly below expectations. Management commentary was constructive, citing a strong H2FY26 outlook aided by greenfield ramp-up, completion of platform transitions across OEMs, and healthy new order inflows. Restructuring in Europe (Modules and Polymer) is near completion, while the Consumer Electronics and Aerospace segments are scaling up well (Aerospace empaneled as Tier-1 supplier to Airbus, with a USD3bn order book). We build in 9%/10%/21% consolidated revenue/EBITDA/EPS CAGR over FY25-28E. While we trim FY26E EPS on gradual expectations of greenfield ramp-up and emerging business margin normalization, FY27E-28E EPS remains largely intact.

Outlook

However, newer businesses (especially consumer electronics) and its renewed India focus is expected to drive SAMIL’s next leg of growth (refer to analyst meet note: Vision 2030: Consumer electronics a major lever for growth); retain BUY; raise our TP by >8% to Rs130 (from Rs120), based on 20x Sep-27E PER.