Samvardhana Motherson’s Q2 FY26 adjusted PAT at Rs 8.6 billion was well above brokerage's estimate of Rs 6.3 billion, growing 15% YoY. Its margin has remained stable YoY at 8.7% despite the adverse global macro headwinds, which is commendable.
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Motilal Oswal Report
Given the better-than-expected performance in Q2 despite adverse global macro, we raise our earnings estimates by 9%/4% for FY26/FY27.
Management has alluded to its next five-year revenue growth aspiration, which now stands at a staggering $108 billion. We expect Samvardhana Motherson International Ltd. 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 Samvardhana Motherson to be the least impacted by these tariffs as it has all its facilities close to its customers and can effectively realign supplies as per customer needs.
Further, this is likely to lead to industry consolidation, with players like Samvardhana Motherson likely to emerge as key beneficiaries in the long run.
Given the long-term growth opportunities, we reiterate our Buy rating with a revised target price of Rs 129, based on 24x Sept-27E earnings per share.
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