Samvardhana Motherson International is scaling up amidst diversification, and maintaining strong pricing power amidst adversities for global OEMs, according to CLSA.
Analysts at foreign brokerage firm CLSA recently interacted with Samvardhana Motherson International's management.
The management highlighted that the company's consumer electronics segment revenue and margin to scale up considerably over the next couple of years, led by commissioning of its largest facility by end-CY26 and a subsequent ramp-up in production
The company's sheer scale of operations, efficient supply chain arrangements and longstanding relationships with OEMs, underpin its strong pricing power and has been helping it to move up the margin curve, CLSA said.
It noted that in times when OEMs are struggling to deliver optimum margin and operate above cost of capital, Samvardhana Motherson has been improving its capital efficiency driven by rising profitability.
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CLSA believes the company's margin and ROCE have ample scope to improve further, led by relatively higher mix of potentially better margin segments such as consumer electronics.
Under its current five-year plan, SAMIL aims to reach $100 billion gross revenue by end-CY30 versus less than $20 billion revenue currently.
The company's management identified expansion in Asian auto markets, wiring harnesses and EV sub-assembly capabilities as key target areas of growth.
Though consumer electronics segment revenue is set to rise manifold in next 2-3 years, supported by growth in EMS, aerospace and semiconductor space from present sub-$500 million levels, CLSA believes autos should continue to contribute more than 90% of group revenue.
CLSA maintained its ‘Outperform' rating on Samvardhana Motherson International shares with an unchanged target price of Rs 190, based on 25x Sep-28CL earnings.
Samvardhana Motherson remains one of CLSA's top picks in the auto ancillary space, supported by its consistent track record of strong execution.
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