Samvardhana Motherson International - Aiming To Treble Scale In Next Three Years: ICICI Securities

ICICI Securities Report

Samvardhana Motherson International Ltd. is targeting to treble its revenue to $36 billion in next three-four years through a mix of organic and inorganic growth with 25% of the revenue mix aimed to come from the non-auto segment (currently it is sub-3%).

Besides, by focusing on capital allocation, efficient working capital management and improved profitability, Samvardhana Motherson is aiming to maintain its targeted return on capital employed of 40% for the envisaged $36 billion entity, post taking care of ~40% dividend payout.

~60% of the incremental revenue is expected from inorganic route, funded by internal cashflows with net debt being capped at 2.5 times Ebitda.

Industry volume growth, vehicle premiumisation, vehicle electrification, new product introduction and wallet share gains would be the key drivers of organic growth.

Japan would be a new large market targeted to contribute meaningfully to Samvardhana Motherson’s revenue (currently it is not even among the company’s top-10 revenue-contributing markets).

Aerospace, logistics, medical equipment and IT services would be the key areas in the non-auto domain, which Samvardhana Motherson would be aiming to ramp up profitably to add to revenue.

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