Target: ₹101
CMP: ₹82.20
Samvardhana Motherson International’s (SAMIL) announcement of 100 per cent acquisition of SAS Autosystemtechnik GmbH (SAS) at EV of €540 million entails an all-round strategic fit providing entry into the new product segment (cockpit module assembly) with global leadership position (nearly 20 per cent share), meaningful acquisition size (about 10 per cent addition to consolidated revenue), headroom for organic growth/synergy benefits through backward integration (about 10 per cent revenue upside on in-sourcing), significant EV exposure (around 50 per cent vs about 6 per cent for SAMIL; meaningful exposure to leading US EV OEM which contributes one-third of revenues), better margin/return-ratio profile, EPS accretive and reasonable valuation (5.2x CY22 EV/EBITDA; Faurecia acquired 100 per cent stake at €450m in 2019).
We retain Buy on SAMIL, with SOTP-based TP of ₹101/share (₹97 earlier), based on FY25 estimates.
SAS is a leading global provider of cockpit module assembly for the automotive industry, with expertise in Just-in-time/Just-in-sequence. This is a major acquisition for SAMIL in five years and would support Company’s vision-2025 target of achieving USD36bn revenue. The acquisition would increase customer proximity, improve competency in module assembly, see rise in content per vehicle and increase EV exposure.