Samvardhana Motherson International Ltd., through its unit, has agreed to buy a 100% stake in SAS Autosystemtechnik GmbH.
Samvardhana Motherson Automotive Systems Group BV will acquire the Germany-based company from Forvia Group company, Faurecia, for an enterprise value of 540 million euros (Rs 4,769.35 crore), according to a stock exchange filing.
"This acquisition will transform Motherson Group into a leading assembler of cockpit modules globally, with a special focus on EV models," said Samvardhana Motherson Group's Chairman Vivek Chaand Sehgal.
The transaction's valuation is "reasonable," according to Jefferies. The transaction's enterprise value of 540 million euros implies 5.3 times the EV/Ebitda ratio of the calendar year 2022, it said.
This, the brokerage said, is a tad higher than the current trading multiples of European auto component companies such as Faurecia and Plastic Omnium, which are at 4.0–4.7 times the EV/Ebitda ratio for the calendar year 2022 and 3.6–4.4 times the EV/Ebitda ratio for the calendar year 2023 on consensus estimates.
"The deal valuation still appears reasonable taking into account some control premium," the brokerage said.
Samvardhana Motherson International is trading at 11 times and 8.3 times the EV/Ebitda ratio of fiscal 2023 and 2024, respectively, according to Jefferies. Although its Indian business gets a higher multiple, it said.
The brokerage maintained a 'hold' rating on the stock with a price target of Rs 70 apiece, indicating a downside of 12%.
The stock had closed 0.56% lower at Rs 79.7 per share on Feb. 17. The benchmark index, Nifty 50 declined 0.51%.
SAS is one of the leading cockpit module integrators globally, with a large electric vehicle portfolio and gross revenues of around 4.4 billion euros (Rs 38,714 crore) on a principal basis, according to the exchange filing.
The transaction, which remains subject to information from or consultation with employee representatives, will be funded by a mix of debt and internal accruals, the company said. The transaction will be completed by the second quarter of fiscal 2024, it said.
This acquisition will help Motherson fit better into the global automotive supply chain and bring it closer to its customers, the company said.
Shares of the company ended 2.82% higher at Rs 81.95, compared to a 0.56% decline in the benchmark Nifty 50. The stock gained 5.71% intraday, the most in eight weeks since Dec. 26.
The total traded volume stood at 2.2 times its 30-day average.
Out of the 21 analysts tracking the stock, 14 maintain a 'buy' rating, four recommend a 'hold,' and three suggest 'sell' on the stock, according to Bloomberg data. The 12-month consensus price target implies an upside of 13.3%.
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