SAMIL shares plunge 9% despite upside revision in targets post Q2 results; here's why

Shares of Samvardhana Motherson International Ltd (SAMIL) plunged 9 per cent in Friday's trade despite upward target price revisions by several brokerages following its September quarter (Q2) results. The fall was in line with a broader market selloff, even as key benchmarks Nifty and Sensex held firm.

SAMIL shares fell 8.77 per cent to hit a low of Rs 152.80 apiece. Jefferies retained its 'Buy' rating on SAMIL and raised its target price to Rs 200, implying 19 per cent upside. SAMIL's Q2 Ebitda and recurring PAT grew 29-37 per cent year-on-year (YoY), coming in 5-6 per cent above Jefferies' estimates, aided by acquisitions and a weaker rupee.

The global investment bank sees multiple growth drivers for SAMIL, including expansion in electronics and aerospace, a full-year contribution from recent acquisitions, and a recovery in North American commercial vehicle (CV) demand. However, rising competition from Chinese original equipment manufacturers (OEMs) in Europe poses a risk.

Emkay Global said  SAMIL’s H2 growth outlook is robust, aided by commercial vehicle (CV) industry demand recovery across markets, healthy and rising orderbook across segments, ramp up of consumer electronics business, and integration of new M&As.

"SAMIL’s consumer electronics capex guidance stands at Rs 7,500 crore, allocated for further capacity expansion, backward integration, and new product development. Full ramp up is expected for this plant by FY28. We maintain Buy; we raise our SoTP-based target by 5.3 per cent to Rs 200 from Rs 190.

Nuvama retained its ‘Buy’ with an increased target of Rs 190 from R 178 earlier. Pending orders, better content and inorganic efforts may drive growth for SAMIL going ahead, it said. "We stay constructive on SAMIL’s prospects led by strong management capabilities, inorganic initiatives, large order book of $106 billion and rising content per vehicle," Nuvama said.

Despite these sizeable acquisitions, SAMIL's leverage has remained stable at 0.8 times net debt to Ebitda, JM Financial said.

"Growth drivers from hereon include strong demand in India autos, US contract wins over the next couple of years, continued US CV strength and the scale-up of non-auto businesses, particularly Consumer Electronics and aerospace. Overall, we expect SAMIL to deliver revenue/EBITDA/PAT CAGR of 16 per cent/20 per cent/33 per cent over FY26–29E. Given the long-term growth opportunities, we reiterate BUY with a revised TP of Rs 205 (earlier Rs 200), based on 24x Sep’28E EPS," JM said.

Nomura's target now stands at Rs 190 from Rs 171, CLSA at Rs 127 from Rs 190, Goldman Sachs at Rs 176 from Rs 165 and JPMorgan at Rs 205 from Rs 200. Citi retained 'Sell' but upped target to Rs 140 from Rs 115.