Samvardhana Motherson jumps 4% after Q3 beat; brokerages raise target price

Shares of automotive components manufacturer Samvardhana Motherson rose sharply on Wednesday, defying an overall subdued market, after the company reported better-than-expected earnings for the December 2025 quarter (Q3FY26) despite adverse global macro conditions.

 

Around 10:50 AM, Samvardhana Motherson's share price was trading 4.2 per cent higher at ₹134.85 compared to the previous session's close of ₹129.43 on the NSE. In comparison, the NSE Nifty50 was trading almost flat at 25,950 levels. The market capitalisation of the company stood at ₹1,42,295 crore. The stock has recovered around 90 per cent from the 52-week low of ₹71.5 touched on April 7, 2025.

 

Samvardhana Motherson Q3FY26 performance

In the Q3FY26, the auto equipment manufacturer reported a 9 per cent year-on-year (Y-o-Y) rise in its consolidated net profit to ₹1,072.27 crore compared to ₹984.35 crore in the year-ago period. Total consolidated profit for the quarter increased 13.5 per cent Y-o-Y to ₹31,409.39 crore against ₹27,665.92 crore in Q3FY25. The company achieved its highest-ever quarterly revenue despite prevailing market uncertainties, according to the statement.

 

Earnings before interest, tax, depreciation, and amortisation (Ebitda) surged by 80 per cent in the December 2025 quarter to ₹3,043 crore as against ₹1,686 crore in the corresponding quarter of the previous fiscal. Ebitda margin stood at 9.7 per cent in the quarter under review.

 

During the quarter, the company reported total capital expenditure (Capex) of ₹1,594 crore, primarily allocated for upcoming greenfields and maintenance.

 

The company announced two new greenfields in Morocco (wiring harness) and Pune (vision systems).

Management commentary

“This quarter is a significant step towards reaffirming Motherson's position as a global design, engineering, manufacturing, assembly and logistics specialist. Customer trust, combined with our diverse capabilities, traction across automotive and non-automotive businesses, and the dedication of our global teams, has resulted in our highest-ever quarterly revenues," said Vivek Chaand Sehgal, chairman at Motherson.

 

Sehgal further added that the company’s strategic investments and capacity expansions underscore its commitment to future growth, while maintaining a comfortable leverage ratio of 1.1 times that reflects operational strength. He expressed confidence that, with continued customer support and the dedication of its teams, the company will sustain long-term value creation for stakeholders. 

Here's what brokerages say

Citing the company's better-than-expected Q3 performance, analysts at Motilal Oswal Financial Services (MOFSL) have their earnings estimates by 6 per cent and 1 per cent for FY26/FY27, respectively.

 

According to the brokerage, the company's management has alluded to its next five-year revenue growth aspiration, which now stands at a staggering $108 billion. It expects Samvardhana Motherson to continue to outperform global automobile sales, fueled by rising premiumisation and EV transition, a robust order backlog in autos and non-autos, and successful integration of recent acquisitions.

 

"While the ongoing tariff issue may lead to some near-term slowdown in some of its key geographies, we expect SAMIL to be the least impacted by these tariffs as it has all its facilities close to its customers and can effectively realign supplies as per customer needs," the brokerage said in its note.

 

Additionally, this is expected to lead to industry consolidation, with players like Motherson likely to emerge as key beneficiaries in the long run. Considering the long-term growth opportunities, MOFSL has maintained a 'Buy' rating on the stock with a revised target price of ₹148, based on 27x December 27E EPS.

 

Analysts at Nomura expect a recovery in passenger vehicle (PV) demand, ramp-up of greenfield plants, growth in aerospace and consumer electronics businesses, and the integration of two recent acquisitions to drive revenue growth of 21 per cent and 11 per cent in FY27F and FY28F, respectively. The brokerage believes operating leverage and cost rationalisation initiatives should help sustain margin improvement.

 

Nomura added that any potential new acquisitions could act as a key upside trigger as the company targets revenue of $108 billion by FY30F, up from $25.7 billion in FY25.

 

In its estimates for FY26–28F, Nomura has factored in the Nexans acquisition from 2QFY27, which contributes revenue of EUR 760 million. The brokerage has also revised its EUR/INR assumption to 108 from 102 earlier, resulting in a 0–7 per cent increase in its EPS estimates over FY26–28F. 

 

Maintaining its valuation framework, Nomura reiterated its 'Buy' rating on the stock and raised its target price to ₹140 from ₹127, based on 19x FY28F EPS. The brokerage said it continues to value the stock at 19x FY28F earnings, at the midpoint of its expected 18–20x trading band. With the stock currently trading at 18x FY27F EPS, Nomura sees the valuation as attractive, supported by an estimated 31 per cent EPS CAGR over FY26–28F and potential upside from inorganic growth opportunities and recently concluded trade agreements across the US and EU.  Disclaimer: The views or investment tips expressed by the brokerages in this article are their own and not those of the website or its management. Business Standard advises users to check with certified experts before taking any investment decisions.