Samvardhana Motherson shares crash 14% today amid heavy volumes; here's why

Shares of Samvardhana Motherson International fell sharply in Thursday's trade amid a block deal buzz by its Japanese promoter company Sumitomo Wiring Systems, which was reportedly looking to offload a stake in the company. According to some reports, Sumitomo Wiring may sell a 3.4 per cent stake in Samvardhana Motherson through a block deal today.

The stock slumped 14 per cent to hit a day low of Rs 66.05 over its previous close of Rs 76.80. Samvardhana Motherson has slipped 16.30 in the past five sessions.

"A case of promoter stake sale in an already bearish environment has ensured a strong gap down for Samvardhana Motherson today. A daily close below Rs 70 today could lead to lower targets of Rs 66-63.5 in the near term," said AR Ramachandran from Tips2trades.

At today's low price of Rs 66.05, the stock traded 6.79 per cent higher from its one-year low level of Rs 61.85, hit on October 25 last year. That said, the counter has declined 32.27 per cent from its 52-week high of Rs 97.52, touched on April 5, 2022.

Around 2.52 crore shares changed hands today on BSE, which was much higher than the two-week average volume of 4.81 lakh shares. Turnover on the counter stood at Rs 176.17 crore, commanding a market capitalisation (m-cap) of Rs 46,810.57 crore. There were 10,45,859 sell orders so far today against buy orders of 8,44,110 shares.

Yet, Kotak Institutional Equities has given an 'Add' call for Samvardhana Motherson while pegging it at a fair value of Rs 95 over the next 12 months.

The scrip has an average target price of Rs 98, Trendlyne data showed, suggesting a potential upside of 41.72 per cent. It has a one-year beta of 1.16, indicating high volatility on the counter.

The stock was last seen trading lower than the 5-day, 20-day, 50-day, 100-day and 200-day moving averages. The counter's 14-day relative strength index (RSI) came at 27.77. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company's stock has a price-to-equity (P/E) ratio of 48.88.

As of December 2022 quarter, Sumitomo Wiring Systems held around 17.55 per cent stake in Samvardhana Motherson.

Samvardhana Motherson is one of the leading automotive component manufacturing companies for OEMs (Original equipment manufacturers). With a global customer base, the company supports its customers from more than 300 facilities across 41 countries.

Meanwhile, Indian equity benchmarks traded flat in afternoon deals today, as losses in metals, banks and technology countered gains in consumer, pharma and energy stocks.

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