'Buy' Samvardhana Motherson Maintains Motilal Oswal Post Q1 Results Citing Long-Term Growth Opportunities
Motilal Oswal retains its ‘Buy’ stance on SAMIL and revises the target price fom the previous level, reflecting a 22% upside based on 24x Jun’27E EPS despite a weak Q1 FY26 .
Samvardhana Motherson’s Q1 FY26 adjusted PAT at Rs 6.2 billion was well below Motilal Oswal's estimate of Rs 9.7 billion, falling 37.5% YoY as its margins were under pressure due to multiple headwinds.
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Given the weak Q1 performance and an adverse near-term macro in key regions, we have lowered our earnings estimates by 9%/2% for FY26/FY27. Management aims to increase its revenue to whopping $108 billion in the next five years.
We expect Samvardhana Motherson International Ltd. to continue to outperform global automobile sales, fueled by rising premiumisation 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 a nearterm slowdown in some of its key geographies, we expect Samvardhana 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 114, based on 24x Jun’27E EPS
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