Samvardhana Motherson shares rally over 7% after Q1 earnings; Motilal Oswal, Nomura weigh in

As per a regulatory filing on Thursday, revenue from operations rose 17% YoY to Rs 35,244 crore, driven by healthy performance across the company's businesses. Profit after tax surged 70.1% YoY to Rs 1,032 crore, while EBITDA grew 26% YoY to Rs 3,104 crore.

The company also announced the acquisition of Chinese tech firm Shenzhen Autocruis for $22.6 million in this quarter, through the Motherson subsidiary SMR Automotive (Langfang) Co., and completed the acquisitions of the Wiring Harness business of Nexans Autoelectric and Yutaka Giken in July. Collectively, these two acquisitions are expected to contribute nearly $2 Billion of annualized revenue.

Also Read |Motherson Q1 profit jumps 102%, revenue hits record

Motilal Oswal remains bullish

Domestic brokerage firm Motilal Oswal reiterated a BUY rating on the stock, with a revised target price of Rs 178. “We expect Motherson 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.” The brokerage stated in its note.## Nomura sets target price of Rs 171

Domestic brokerage firm Nomura retains a BUY rating on Samvardhana Motherson International, with a target price of Rs 171, implying an upside of over 10%.Our FY27F/28F/29F revenue growth is 11%/12%/18% above consensus, driven by the ramp-up of greenfield plants and strong growth in non-auto segments led by consumer electronics. The brokerage expects sustained margin improvement with operating leverage. With 6-7% free cash flow yields (FY28F/29F), further potential exists for acquisition-driven growth, it stated.

Management continues to work with customers to pass through higher input costs while driving cost optimisation initiatives, the brokerage stated in its report, as copper prices increased 4% QoQ and are up ~40% YoY, creating input cost pressures. These costs are typically passed on to customers with a 1-2 month lag, while overall commodity pass-through mechanisms generally

operate with a 3-6 month lag. Freight costs remained elevated, with the World Container Index up 40% YoY and 83% QoQ, resulting in additional logistics costs to ensure timely deliveries.

Any material import tax in US geography could impact Motherson’s key clients (e.g., Audi) and affect Motherson’s order book, which could be a key risk to achieving the target price. as per Nomura’s report.

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