Samvardhana Motherson zooms as Jefferies believes new acquisition could add 10-15% to topline

At an enterprise value of €540 million, the transaction multiple of CY22 EV/EBITDA at 5.3x is reasonable, according to foreign brokerage firm Jefferies.

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Share price of automotive company Samvardhana Motherson opened 4 percent higher on February 20, after it announced the acquisition of Germany-based SAS Autosystemtechnik, a leading provider of cockpit module assemblies.

At 10 am, the stock was quoting at Rs 81.55 per share, higher by 2.32 percent amid heavy volumes. It is trading above all its key moving averages.

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The acquisition is part of Samvardhana Motherson’s strategy to expand its product offerings and strengthen its position in the European market, believe analysts.

“We have always added new products and technologies to closely serve our customers in a more cohesive way. The acquisition of SAS is an important step in this direction,” said Vivek Chaand Sehgal, Chairman of Samvardhana Motherson.

At an enterprise value of €540 million, the transaction multiple of CY22 EV/EBITDA at 5.3x is reasonable, according to foreign brokerage firm Jefferies.

Also Read: Minda Corp’s Pricol stake buy driven by connected-mobility play?

In CY22, SAS generated net revenue of €896 million and EBITDA of €103 million, which is 10-15 percent of FY23E consolidated revenue and EBITDA estimate for Samvardhana Motherson, it added. The firm has a hold rating on the stock with a target price of Rs 79.55.

According to domestic brokerage Motilal Oswal Financial Services, “This business has significant entry barriers due to deep expertise and customer trust. It will lead Motherson to increased customer proximity, more content per vehicle for other product lines and increased exposure to EV programs.”

SAS gets 32 percent of its revenues from a leading American EV OEM, 29 percent from Volkswagen, 12 percent from Skoda and 5-8 percent each from Mercedes, Porsche and Audi. About 50 percent of its net revenues come from EV programs.

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