Samvardhana Motherson’s Vision 2030: Will The Next Five-Year Plan Beat The Last One?

Samvardhana Motherson International Ltd is in focus after the automotive components manufacturer unveiled 'Vision 2030'--its next '5-Year Plan'. Over the last couple of decades, the company has been guiding the Street with its five-year plans, the current one ending between 2020-2025.

However, 'Vision 2030' stands out compared to the previous five-year plans due to the notable increase and mentions of Non-Auto verticals such as aerospace, consumer electronics amongst other verticals.

While the numbers for the next five years are punching above their weight, it does not change the fact that the company wasn’t able to achieve major targets for its previous five-year plan between 2020-2025. What are the latest plans and what do brokerages make of it?

1.The management plans a Gross Revenue target of $108 billion by FY30. In comparison, the company reported $25.7bn in gross revenue in FY25 implying a 33% CAGR. It is looking for a notable portion up to 75% of incremental revenue is likely to come from acquisitions.

2.The second key aspect is that the company aims to deliver 40% consolidated Return of Capital Employed versus 18% in FY25. This has been a focal point as it was targeted even in previous cycles. But, due to consistent acquisitions, it has not been able to achieve it since 2005.

3.The third key takeaway from the company’s five-year plans is to maintain a dividend payout ratio of up to 40%. In the previous five-year cycle, the company had achieved a dividend payout ratio of 29%.  

4.Over past five decades, SAMIL progressed from a component manufacturing to integrated assemblies. The next target is a full vehicle assembly by 2030. The company started as a tier-3 supplier of components in the 1980s.

Since then, there has been a steady progress to become a tier-1 supplier for products and eventually, of systems by 2011. It is now targeting to be a ‘Full Car Assembly’ from an integrated assembly player currently by 2030.

5.The Non-Auto Segment is the other key target for the company in the 5-year plan. Non-auto revenues at Rs. 5,800 crore in FY25, contributed 5% of total revenues. This was mainly led by Aerospace, Logistics, Health & Medical, and IT accounting for 55% of this segment.

For Consumer Electronics, their mega Chennai plant is likely to be commissioned by mid-CY26. SAMIL also hinted at possibility of value unlocking through a separate listing of the new business as it scales.

Global brokerage Jefferies says that more than the absolute number, what stands out is SAMIL's huge growth appetite. Jefferies has maintained a ‘Buy’ on the stock with target price of Rs 110 per share.

Jefferies say they like SAMIL's strong manufacturing capabilities and its expanding addressable market within non-auto space while Investec says optimism is evident in its intention to scale up the consumer electronics business.

Investec maintains Maintain Hold with TP of Rs 95 and retained valuation of 18x FY27 while Morgan Stanley feels that the reputation for on-time and quality delivery is now bringing in customers from non-auto sectors. -Nuvama estimates emerging business revenue CAGR of 23% over FY25–28.

Samvardhana Motherson has been laying out their five-year plans since 1995. This gives investors an insight into the company’s focus over the next few years. However, the company missed their targets across metrics in the previous cycle between 2020-2025.

Going forward, brokerages believe that 'Vision 2030' will be a meaningful target plan for Samvardhana Motherson to say the least given the multi-polarity in focus across auto and non-auto space. The stock is buzzing in trade on Sept. 8, after the brokerage notes. Shares have jumped over 4% intraday. At 12:45 pm, Samvardhana shares traded 3.92% higher at Rs 98.31 apiece on the BSE against a 0.44% rise in the BSE Sensex.