Why did YES Securities raise target on Samvardhana Motherson with 'Buy'?

YES Securities has reiterated its ‘Buy’ rating on Samvardhana Motherson International, maintaining a positive stance on the auto component major despite a volatile global macro backdrop. The brokerage has revised its target price to ₹139 per share from ₹133, valuing the stock at 25x March 2028E earnings per share (EPS). At current levels, Samvardhana Motherson is trading at 23.8x/21.1x its FY27/FY28 consolidated EPS, with YES Securities building in revenue/Ebitda/PAT compound annual growth rate (CAGR) of 9.5–14 per cent.

 

The brokerage attributes Samvardhana's recent stock outperformance to a resilient H1FY26, marked by stable booked business and limited impact from US tariffs, with pass-through discussions underway.

Stable order book, tariff impact fading

YES Securities notes that Samvardhana Motherson’s growth outlook remains robust, supported by new program ramp-ups, increasing content per vehicle, greenfield capacity additions and accelerating contributions from non-auto segments. Despite global uncertainties, Samvardhana Motherson booked business remained stable at $87.2 billion as of September 2025, against $88.1 billion in March 2025 and $87.7 billion in September 2024, of which about $3 billion is from non-auto, against $2.7 billion in March 2025. The company has reiterated that it does not expect any major impact from US tariffs, as discussions with customers on tariff pass-through are underway. Margin momentum is expected to improve further on the back of operating leverage, a better product mix and a continuing turnaround in European operations, where transformation efforts are already visible in the modules vertical.  CATCH STOCK MARKET LIVE UPDATES TODAY

Non-auto engine: Consumer electronics and aerospace scaling fast

YES Securities highlights non-auto as a key growth pillar, with Samvardhana Motherson “preparing to lap up both global and local opportunities.” Within consumer electronics (CE), two plants are already operational, with the largest plant’s SOP (start of production) slated for Q3FY27. 

 

CE revenues grew 36 per cent quarter-on-quarter (Q-o-Q_ in Q2 and are expected to accelerate in H2FY26. Heavy capex is underway to build competencies and capacity to serve both global and domestic clients, and CE is currently exempt from US tariffs, with no change in schedules, which supports visibility. In aerospace, revenues grew 37 per cent year-on-year (Y-o-Y) in H1FY26. Samvardhana Motherson is developing around 6,000 unique parts and is already a Tier-1 supplier to Airbus and Boeing, and a Tier-2 supplier to Embraer. It is also the only Indian firm exporting aircraft components to Japan, focusing on complex, large components and MRO parts, with eventual platform-level opportunities.

Diversification across high-growth markets adds resilience

The brokerage underscores Samvardhana Motherson’s prudent geographic diversification, noting that over 50 per cent of revenues now come from emerging markets, a milestone achieved in FY25. Furthermore, its presence in high-growth markets such as India, Mexico, China, Japan and broader Asia is deepening, and non-automotive businesses are also gaining traction. 

 

In line with the rising importance of Chinese original equipment manufacturers (OEMs) globally, the company has established a direct presence in China and localised production for these OEMs in Europe, Mexico and Southeast Asia. YES Securities believes this diversification across products, customers and geographies adds resilience to the company’s earnings profile and positions it well for the next leg of growth.

Core businesses retain ample whitespace for secular growth

Despite aggressive expansion into non-auto, YES Securities sees significant runway within its base businesses. In wiring harness, large harness applications for rolling stock and aerospace cockpits are still 50–70 per cent in-sourced by customers, offering a healthy outsourcing opportunity for the company going forward. 

 

For vision systems, beyond mirrors, the division is vertically integrated into actuators, reflector-glass modules, lighting systems, camera modules and control electronics. Recent launches include camera monitoring systems (CMS) for electric vehicles (EV) SUVs, illuminated emblems and ambient interior lighting, and advanced mirrors for premium motorcycles. 

 

In modules and polymers, the portfolio now spans exterior and interior polymer-based systems, including sunroofs, plastic fuel tanks and aesthetic exterior/interior parts. Acquisitions such as Dr. Schneider (air vents and decorative interiors), Bolta US (chrome components), Saddles (premium upholstery) and Yachiyo (sunroof systems and plastic fuel tanks) are expected to complement this growth, significantly enhancing Samvardhana’s product capabilities and content per vehicle.