Emkay Global Sees Significant Upside From This World's Largest Auto Anciliary Company

Samvardhana Motherson International is one of the world's largest manufacturers of components for automotive industry. Emkay Global sees a significant upside of upto 19.8% from this bluechip stock, as per the estimates.

Samvardhana Motherson International's quarterly snapshot

According to the research report, Samvardhana Motherson International financial results for the quarter were in -line with the brokerage estimates. "For Q3FY23, SMIL's consolidated revenue grew by 25% YoY to Rs 202.3 billion, above our estimates due to better revenues in SMRPBV and the standalone divisions. Consolidated EBITDA grew by 46% YoY to Rs 15.8 billion, in line with our estimates. EBITDA margin expanded by 110bps to 7.8%. Overall, consolidated PAT grew by 388% to Rs 4.5 billion (Emkay est.: Rs4.5 billion), meeting our estimates. SMRPBV revenues beat our estimates, but EBITDA was below our forecast due to higher energy cost - Revenue grew by 23% YoY to Rs 138 billion and EBITDA grew by 14% to Rs 9.2 billion. Q3FY23 industry production volumes for global light vehicles grew by 2% YoY and that for commercial vehicles declined by 6%.

Emkay Global's View: 'Buy' share of Samvardhana Motherson International, with a price target Rs 97 per share

Embay Glolbal suggests investors to buy this stock. "Management expects margin expansion ahead, on cost pass-through, energy cost deflation and better scale. We expect 10% revenue CAGR over FY23-25E, driven by the industry upcycle across regions and better wallet share due to premiumization / electrification. We expect EBITDA margin to expand, from 7.5% in FY23E to 9.6% in FY25E, driven by better scale, improved net pricing and cost savings. We retain BUY on the stock, with SOTP-based target price of Rs 97 per share (Rs 94 earlier), based on FY25 estimates (Dec-24E earlier). Our target P/E for the standalone operations stands at 30x, for Motherson Wiring at 34x, and for SMRPBV at 15x, based on DCF valuation."

The last traded stock price of Samvardhana Motherson International is Rs 79.25 per share. Its 52-week high is at Rs 121.06 and 52- week low price is Rs 61.85. Its free flow market capitalisation is Rs 15,036.58 crore.

Samvardhana Motherson International to distribute Non-Convertible Debentures

In a filing on exchange, it was given that in the Samvardhana Motherson International's board meeting held on February 8, 2023, the directors gave their approval to distribute Non-Convertible Debentures. "The board of directors in its meeting held, has approved the issuance of Rated, Listed, Unsecured, Redeemable Non-Convertible Debentures of face value of INR 1,00,000/- (Rupees One Lakh) each, for an aggregate principal amount of up to INR 3000,00,00,000 (Rupees Three Thousand Crore), on a private placement basis, in one or more series/ tranches to certain eligible investors permitted to invest in the NCDs under applicable laws."

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