Kotak Institutional Equities has maintained its sell rating on Samvardhana Motherson International Ltd (SAMIL) with a target price of ₹95 per share after the company announced the acquisition of Germany-based AutoElectric for €207 million (4.3x CY2024 EV/EBITDA), subject to regulatory approvals. The brokerage said that while the deal strengthens SAMIL’s presence in advanced wiring harness systems, the near-term earnings impact is likely to be marginally dilutive.
According to Kotak, AutoElectric brings strong engineering capabilities, premium OEM proximity in Europe and expertise across LV/HV harness categories—attributes that strategically complement Motherson’s global ambitions. The acquisition also enables access to a broader global customer base at a time when the content of electronics in passenger vehicles continues to rise.
However, Kotak highlighted that macro indicators for global passenger vehicles remain muted, especially across key regions such as Europe and China. Given the uncertain demand backdrop, elevated valuations and Motherson’s ongoing integration of multiple global acquisitions, the brokerage believes risk-reward remains unfavourable in the medium term.
Kotak added that the transaction, although strategically aligned, will require careful execution to ensure synergies are realised without compromising profitability. It noted that the stock currently trades at demanding multiples relative to the underlying growth visibility, reinforcing its sell stance.
Disclaimer: The views and recommendations above are those of Kotak Institutional Equities. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
