Shares of Samvardhana Motherson saw a decline of nearly 3% in early trading today, following downgrades from both Investec and Citi. The stock was trading at ₹184.59 as of 9:33 AM, reflecting concerns over the company’s future performance, especially in its key European market.
Investec Downgrade
Investec downgraded Samvardhana Motherson to a “Hold” with a target price of ₹195. The firm cited weakness in the European market, which contributes around 36% of the company’s consolidated revenues, as a key factor. Major European automakers like Volkswagen, Mercedes, and BMW have provided a subdued outlook, which has dampened confidence in future growth. Despite the stock’s 85% rise this year, Investec cut its FY25 and FY26 earnings estimates by 3-5% due to the weak growth outlook in the core business.
Citi Downgrade
Citi took a more bearish stance, issuing a “Sell” rating with a target price of ₹105. Citi placed Samvardhana Motherson on a 90-day Negative Catalyst Watch, pointing to weak auto volumes across global markets, particularly in Europe. The company’s board recently approved raising funds, which Citi believes could add further strain to the balance sheet. Samvardhana Motherson’s net debt currently stands at ₹16,000 crore, including leases. If the company raises funds through equity, it could lead to earnings dilution. Valuations also appear high, with the stock trading at 38x and 32x FY25 and FY26 earnings respectively, offering little comfort for investors.
