Shares of Samvardhana Motherson have surged over 30% since the start of the year, and analysts at Geojit BNP Paribas see the stock going further up as the macroeconomic environment stabilises.

The Samvardhana Motherson Analyst: Geojit’s Saji John upgraded the stock’s rating from “hold” to “buy” with a price target of ₹134. The target indicates an over 34% upside from the stock’s last closing price of ₹99.50.

The Samvardhana Motherson Thesis: The brokerage in its note showed appreciation for the company’s performance in the June quarter. The firm noted that the auto parts maker’s revenue increased 27.2% YoY to ₹22,462 crore driven by robust automotive production volume and strong performance across business divisions.

The firm said that China played a leading role in the growth, while other key regions — Europe, North
America and India — remained stable quarter on quarter.

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The firm highlighted that the company’s EBITDA grew a significant 68.3% YoY to ₹1,978 crore. Additionally,
the EBITDA margin widened 210 basis points year-on-year to 8.8%. As per the firm, these improvements are attributable
to factors such as premiumisation, operational efficiency and a decline in material and energy costs.

The brokerage also pointed out that the company has been actively making new acquisitions and successfully closed seven of them since April 2023. “These acquisitions are expected to generate annual gross revenue of $4.9bn or net revenue of $1.1bn in the upcoming quarters,” the firm remarked in its latest note on the stock.

Price Action: Samvardhana Motherson’s share price was up 1.41% to trade at ₹100.95 in the early hours of trading on Monday.

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