Target: ₹141

CMP : ₹115.55

Samvardhana Motherson International’s Q3 EBITDA rose 47 per cent y-o-y/26 per cent q-o-q to ₹2,370 crore, with EBITDA margin at 9.2 per cent (+125bp y-o-y/+120bp q-o-q). EBITDA, adjusted for one-off expense from hyperinflationary environment in Argentina, was 9.5 per cent. Consolidated revenue rose 27 per cent y-o-y/10 per cent q-o-q to ₹25,690 crore. Ex-hyperinflationary impact, adjusted PAT was ₹733 crore (+161 per cent y-o-y/q-o-q).

Yachiyo, Cirma Enterprise, Lumen Group and ADI Group are the key acquisitions that are yet to be completed and may contribute to incremental revenue of $1.1-1.2 billion revenue from FY25. The Red Sea issue has had no major impact as production lines are in the same geography as customers.

Hyperinflationary environment in Argentina temporarily hit operations and profitability. We factor in higher consolidated EBITDA margin of 9.5/10 per cent in FY25/26 on operating leverage benefit from integration of inorganic acquisitions. We have yet to factor in the upcoming acquisitions of which may contribute further 10 per cent to the topline.

SAMIL continues to score high on our LACE mega-trends framework of evaluating auto ancillaries as highlighted in our recent thematic.

We reiterate Buy with a higher TP of ₹141 from ₹131, on 18x FY26E P/E.