Stock Of The Day: Samvardhana Motherson's Revival — If Any — To Be Capped As Target Cuts Reign

Shares of Samvardhana Motherson International Ltd. extended their fall on Monday after target price cuts reigned over the stock as cloudy macro overshadowed a 62% net profit growth in the third quarter.

The counter has slipped over 21% this year after the stock fell nearly 30% in 2024, along with the broader market. The stock fell as much 4.06% during the day compared to a 0.89% fall in the benchmark Nifty 50.

The stock trades below the long-term trend gauge indicator — 200-day moving average — while it also trades below the 14-day simple moving average and the 21-day exponential moving average.

The stock is currently trading at its lowest level since May 2024, and any comeback is capped to the Rs 160 level, as determined by most analysts. The counter faces immediate support at the Rs 122 mark, which is a 2-standard deviation below the 14-day moving average.

Total traded volume so far in the day stood at 14.2 times its 30-day average. The relative strength index was at 36.76.

Seventeen of the 23 analysts tracking the company have a 'buy' rating, three suggest a 'hold', and three have a 'sell', according to Bloomberg data. The average of the 12-month analysts' price target implies a potential upside of 35%.

The auto-component maker on Friday reported a consolidated net profit of Rs 879 crore for the third quarter that ended Dec. 31, 2024. The company had reported a net profit of Rs 542 crore for the October-December quarter of the last fiscal year.

The third quarter profit included Rs 191 crore negative impact due to loss in subsidiary. Total revenue from operations rose to Rs 27,666 crore for the third quarter of this fiscal year, as compared to Rs 25,644 crore in the year-ago period.

Macro indicators remain largely stable, and volatility in commodity prices and energy in Europe continues. The global passenger vehicle volumes remained flattish while commercial vehicles fell year-on-year.

Capital expenditure has been revised downwards from Rs 5,000 crore to Rs 4,500 crore, the company said in its conference call. "Reduction in capex primarily in Europe and US regions, to align with lower production levels and delay in SOPs."

Bank of America retained a 'buy' rating on the stock and lowered the target price to Rs 160 apiece from earlier Rs 175. The company reported a decent quarter despite a challenging macroeconomic environment, it said.

The non-automotive business expansion and mergers and acquisitions remain key focus areas, and the emerging businesses are positioned for significant scale-up, BofA said.

Nomura Research retained its 'buy' rating and revised the target price lower to Rs 166 per share from the earlier Rs 194 apiece. The brokerage is constructive on the company's prospects on the back of strong management capability, inorganic initiatives, pending order book, and increasing content.

Motilal Oswal expects the company to outperform global automobile sales, on a robust order backlog and successful integration of recent acquisitions. The brokerage cut the target price to Rs 126 per share while retaining a 'buy' rating.

After factoring in the demand slowdown in key regions, Motilal Oswal has lowered its fiscal 2026 earnings per share and largely maintained the current year's EPS.