Geojit Investments has issued a BUY call on Samvardhana Motherson International Ltd. (SAMIL), setting a target price of Rs 120. The research highlights SAMIL’s resilient revenue growth, even as profitability faced transient pressures from raw material costs and restructuring expenses, predominantly in its European units. Noteworthy is the company’s robust performance in emerging markets and a strategic roadmap preparing it for renewed strength in coming quarters. Despite margin compression, management’s foresight—along with aggressive investments and a globally diversified order book—positions SAMIL for a rebound. Investors are advised to consider the revised levels, with technical and fundamental metrics outlined below.

Samvardhana Motherson Looks Fundamentally Strong

Geojit Investments has upgraded Samvardhana Motherson to a BUY, projecting a 13% upside over a 12-month horizon to Rs 120. Factors include steady topline growth via acquisitions, margin recovery prospects, and strategic moves in emerging markets. Near-term cost and restructuring challenges are expected to subside, paving the way for improved demand and performance in subsequent quarters.

Key Investment Highlights

1. Revenue Growth Driven by Acquisitions and Emerging Segments

Consolidated revenue in Q1 FY26 increased 5.0% YoY to Rs 29,943 crore, with significant contributions from Atsumitec and recently acquired businesses.

Emerging ventures surged 27.5% YoY, offsetting weaker performance in modules and polymer segments.

Excluding acquisition effects, organic revenue saw a 2% uptick.

2. Margin and Profitability Pressures Remain Transitory

EBITDA dropped 9.2% YoY to Rs 2,270 crore due to elevated input and employee costs.

The EBITDA margin narrowed 120 basis points to 7.6%, while profit after tax (PAT) fell 44.8% YoY, impacted by restructuring expenses in European units.

Management anticipates margin improvement as restructuring concludes and demand strengthens in developed regions during H2 FY26.

Financials at a Glance

3. Healthy Balance Sheet with Controlled Leverage

Net debt including leases rose to Rs 11,228 crore in Q1 FY26, driven by working capital expansion and foreign exchange volatility.

Net debt/EBITDA remains at a manageable 1.1x.

About half the planned FY26 capex has been executed, with major investment earmarked for new facilities and expansion, particularly in Taiwan.

Segmental Performance and Outlook

4. Premiumisation and Global Expansion Fuel Future Growth

Focus on premium offerings and new partnerships—such as Taiwan’s sunshade and roof system venture—sets the stage for sustained growth.

Recent acquisitions aligned strategically, contributing about Rs 700 crore to Q1 topline.

Developed markets are expected to recover in the near term as operational challenges subside.

5. Well-Diversified Order Book Anchors Resilience

SAMIL’s diversified business lines and global presence cushion it from regional and sectoral volatility.

Forward-looking order intake signals sequential improvement in Q3 and Q4 FY26.

Valuation and Investment Rationale

6. Valuation Reflects Growth Potential

Valuation stands at 24x FY27E adjusted EPS, supporting the Rs 120 price target—13% higher than the current market price of Rs 106.

Projected sales for FY27: Rs 135,564 crore; FY27 EBITDA: Rs 13,189 crore; FY27 adjusted PAT: Rs 5,274 crore.

Debt/equity ratio forecast to fall to 0.1 by FY27, with EV/EBITDA at 8.8x and ROE at 12.5%, highlighting improving shareholder returns.

Stock Levels and Target Prices

7. Technical and Fundamental Levels for Traders and Investors

52-week high/low: Rs 144 / Rs 72.

BUY rating with a 12-month target price: Rs 120.

Immediate resistance: ~Rs 110; Major resistance: Rs 120 zone.

Supports: Rs 100 (minor), Rs 92 (major and recent swing low).

Market Cap: Rs 111,873 crore; Enterprise Value: Rs 122,810 crore.

Financial Summary Table

Conclusion: Outlook and Recommendation

Accumulation at current levels is recommended, with a BUY rating and a 12-month target price of Rs 120, emphasizing SAMIL’s structural growth levers, operational resilience, and improving return profile. Investors should watch support zones for optimal entry while tracking margin trends as cost challenges subside.