Stocks to purchase, target prices revealed: Exploring the factors driving optimistic investments in Samvardhana Motherson
In the bustling world of automotive ancillaries, Samvardhana Motherson, a leading name, has set its sights on a significant milestone. The company has announced its Vision 2030, aiming to quadruple its gross revenue to an impressive USD 108 billion by FY30, positioning the Motherson group among the top-3 auto ancillaries globally.
This ambitious plan is not just limited to the automotive sector. Jefferies, a global investment bank, expects around 25-33% of this revenue to come from non-auto sectors, as Samvardhana Motherson expands into aerospace, consumer electronics, and semiconductors. The company has already made strides in this direction, becoming a tier-1 supplier to Boeing and Airbus, and scaling its electronics business with new plants opening over FY26-FY27.
Despite the challenges posed by COVID-19, semiconductor shortages, and energy crises in Europe, Samvardhana Motherson significantly outperformed the market in recent years. Even though the company fell short of its FY20-FY25 revenue target of USD 36 billion, its resilience is evident in its robust 3x growth in EBIT and 4.7x growth in PAT in the past five years.
Three brokerages – Jefferies, ICICI Securities, and Motilal Oswal – have shown confidence in Samvardhana Motherson's future, recommending a 'Buy' on the stock. ICICI Securities, in particular, believes that the company's expansion into new sectors, along with strategic acquisitions, is central to its growth story.
ICICI Securities has set a target price of Rs 115 for Samvardhana Motherson, representing a 22% upside, while Motilal Oswal expects a 21% upside with a target price of Rs 114. Global brokerage Jefferies has assigned a 'Buy' rating to Samvardhana Motherson with a target price of Rs 110.
Samvardhana Motherson's growth strategy also includes potential acquisitions in the automotive sector. The company has identified Peguform, Ichikoh, and Stoneridge as its targets. Furthermore, Motilal Oswal expects the company's management to look to unlock value by listing some of its key businesses separately at an opportune time.
However, the report does not mention any specific return on capital employed (RoCE) or dividend payout targets by FY30. Nor does it discuss any expectations of Samvardhana Motherson's management to list some of its key businesses separately at an opportune time.
The report also does not mention any direct impact of tariff uncertainties on Samvardhana Motherson. This suggests that the company may not be significantly affected by trade tensions, providing a stable foundation for its ambitious growth plans.
In conclusion, Samvardhana Motherson's Vision 2030 represents a bold step forward in the company's journey. With its focus on expansion, strategic acquisitions, and value creation, the company is poised to make a significant impact in the global auto ancillaries market.
