Buy Samvardhana Motherson International; target of Rs 205: ICICI Securities

Moneycontrol • 4 days ago

Original source

Key Investment Pillars

  • Diversified business model: SAMIL's well-diversified business model, strong customer relationships, and powertrain-agnostic portfolio position the company favourably, helping it navigate global uncertainties.
  • Growth in non-auto segments: Non-auto segments (led by consumer electronics and aerospace) are expected to see a strong ramp-up from FY28 onwards, backed by a rising order backlog.
  • Acquisitions and cost optimization: Acquisitions remain another key lever to support growth, and cost-optimization efforts in the EU are expected to improve margins.
  • New platform/model launches: New platform/model launches from global LV OEMs bode well for SAMIL's content growth and profitability.

Thesis Validation Checklist

  • Revenue growth: Watch for revenue growth driven by new platform/model launches and expansion in non-auto segments.
  • Margin expansion: Monitor margin expansion driven by cost-optimization efforts and improving business mix.
  • Order backlog: Track the growth in order backlog, particularly in non-auto segments.
  • Acquisition integration: Evaluate the successful integration of acquisitions and their contribution to revenue and profitability.