CLSA SEES SAMVARDHANA MOTHERSON SHARES DOUBLING WITHIN THREE YEARS, $20 BILLION REVENUE BY 2029

Shares of auto components maker Samvardhana Motherson International Ltd (SAMIL) can double within the next three years, Hong Kong-based broking firm CLSA shared in a note dated March 26, 2025.

However, for the next 12 months, CLSA maintained its 'outperform' rating on SAMIL shares, with a target price of Rs 167 apiece which indicates an upside potential of 23 percent from the previous session's closing price.

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Over the past six months, shares of Samvardhana Motherson have cracked 35 percent amid the ongoing market correction, as a result of US President Donald Trump's threat of tariffs, macro concerns, coupled with a valuation de-rating.

CLSA expects Samvardhana Motherson's revenue to grow at an 11 percent CAGR from financial year 2025 to 2027, reaching $16 billion with EBITDA margins of 9.5 percent.

The brokerage attributed this growth to a rising share of Emerging Markets (EMs), SUVs, and EVs. It projects another 11 percent CAGR for financial years 2027-2029, estimating revenue at $20 billion with margins at 9.8 percent by financial year 2029.

CLSA also noted that the company could use up to $1.5 billion in cash flows for M&A activity in financial years 2028-2029, supporting its $20 billion revenue target for financial year 2029.

"With the tariff issue settling down potentially in the next six to nine months, a better execution visibility in the EMS business, target market macros settling down after a year of slowdown, we believe SAMIL should start seeing a reversal in valuation multiples," said CLSA, in its note.

Shares of Samvardhana Motherson will also be in focus in trade today, on the back of  U.S. President Donald Trump's recent announcement of a 25 percent tariff on all foreign auto imports to the U.S.

One of India's largest auto component manufacturers, Motherson has a strong presence in both Europe and the U.S. The company supplies components to major American carmakers, including Tesla and Ford.

However, since Motherson has built significant local manufacturing facilities in both the U.S. and Europe, it is less vulnerable to import tariffs compared to component makers relying solely on exports.

 

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2025-03-27T02:53:00Z