Why Samvardhana Motherson Shares Are Skyrocketing Today

After falling close to 1% on Tuesday, shares of Samvardhana Motherson jumped back in the green on Wednesday.

What Happened: The surge today comes as the company announced major acquisitions. In a press release, the company announced that its subsidiary SMRP B.V. has entered into an agreement to acquire an 81% stake in Yachiyo's 4W (Y4W) Business housed under Yachiyo Industry.

The acquisition would be through an 81:19 joint venture between Honda and Motherson. The Japanese company engaged in the production of automobile parts, i.e., sunroofs, fuel tanks and resin products. It has 13 manufacturing facilities and three R&D facilities in eight countries across the world. The total deal value -i.e., 100% of the company – is around 22.9 billion yen (around ₹1,309 crore).

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In a separate regulatory filing, the company also announced plans to acquire a majority stake in Prysm. The company is engaged in design development, manufacturing and sale of large-format touch-enabled
display screens with embedded collaborative software. The company has initially invested $14 million (around ₹1,148 crore) to purchase 12% optionally convertible secured notes.

Analysts’ Reactions: Citi maintained its “sell” rating on the stock with a price target of ₹65. The research firm said that the Yachiyo acquisition is more significant. However, the firm highlighted that while the acquisition will help the company’s topline, the impact on returns is not certain.

Nomura, on the other hand, upgraded the stock’s rating to “buy” from “neutral” with a price target of ₹105. The research firm said that the company’s foray into the sunroof segment and the Japanese market is promising.

Global brokerage firm CLSA also maintained its ‘buy’ rating for the stock with a price target of ₹102. The brokerage also stressed the point the Yachiyo acquisition could bear great fruits for the company.

Price Action: Samvardhana Motherson’s share price was up 5.23% to trade at ₹89.60 as the markets opened on Wednesday. The stock also hit a new 52-week high today of ₹93.65.

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Posted In: M&AUpgradesPrice TargetAnalyst RatingsMoversTrading IdeasHonda MotorSamvardhana Motherson InternationalYachiyo