Buy Samvardhana Motherson; target of Rs 175: Motilal Oswal

Motilal Oswal's research report on Samvardhana Motherson

SAMIL’s 4QFY25 EBITDA margin at 9% was below our estimate of 10% even as PAT came in line with estimates, largely due to a lower tax rate. Organic growth was flat YoY and margins were impacted by tariff-led uncertainties in many regions and start-up costs for greenfields in non-auto. Management has alluded to its next five-year revenue growth target of a whopping USD108b (from current USD25.7b). We expect SAMIL to continue to outperform global automobile sales, fueled by rising premiumization and EV transition, a robust order backlog in autos and non-autos, and successful integration of recent acquisitions. While the ongoing tariff issue may lead to some near-term slowdown in some of its key geographies, we expect SAMIL to be the least impacted by these tariffs as it has all its facilities close to its customers.

Outlook

Given the long-term growth opportunities, we reiterate our BUY rating with a TP of INR175, based on 24x FY27E EPS.

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