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ICICI Direct Report
Samvardhana Motherson International Ltd. (erstwhile Motherson Sumi) primarily serves the global passenger vehicle industry with wiring harnesses, vision systems (mirrors) and plastic body parts as key product lines.
Key triggers for future performance:
Samvardhana Motherson International, in the recent past, informed exchanges about its mirror business under Samvardhana Motheson Reflectec entering into a share purchase agreement with Ichikoh Industries, Japan for acquiring its mirror business involving three plants in Japan and China largely serving Japanese original equipment manufacturers.
It is being acquired at an enterprise value of ~Rs 300 crore for a business realising ~Rs 900 crore sales and ~Rs 75 crore Ebitda i.e. at a valuation of ~4 times enterprise value/Ebitda and ~0.3 times price-to-sales.
We believe the acquisition has been executed at a healthy valuation and should be accretive for Samvardhana Motherson International. However, the size of the acquisition is small within the broader scheme of things at Motherson.
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