Samvardhana Motherson Q1 Results: Stock surges on optimistic management commentary

Shares of auto components manufacturer Samvardhana Motherson International Ltd. (SAMIL) recovered from the lows of the day to gain as much as 2.5% on Wednesday, August 13, after the management highlighted in its post-earnings statement that the recently imposed tariffs on India by the Donald Trump administration, will have no material impact on their operations.”While uncertainties in the business environment persist, it also offers inorganic opportunities for growth,” Vivek Chaand Sehgal, Motherson’s chairman said.

Samvardhana Motherson highlighted that the company is well positioned to navigate the evolving tariff situation, with majority of the sales in the US being compliant with the US-Mexico-Canada (USMCA) agreement and agreements with customers to pass on related costs are in progress, but with a lag.

Samvardhana Motherson reported a net profit of ₹512 crore, which is nearly half of the ₹994 crore figure last year, and also well below the CNBC-TV18 poll expectation of ₹975 crore.
Revenue for the quarter stood at ₹30,212 crore, a growth of 4.7% from the year-ago quarter, but below the CNBC-TV18 poll of ₹30,892 crore.Earnings Before Interest, Tax, Depreciation and Amortisation missed expectations of ₹2,806 crore, declining 11.4% year-on-year to ₹2,458 crore, while EBITDA margin narrowed by 150 basis points to 8.1%, lower than the CNBC-TV18 poll estimate of 9.1%.

The net debt at the end of the June quarter increased to ₹11,228 crore, from ₹9,791 crore at the end of the March quarter. The management attributed the increase in debt to sharp forex volatility witnessed during the quarter.

Here’s how the margins for the various business segments of the company fared:

• Wiring Harness margins at 11.4% from 11.7% last year.
• Vision Systems Margins at 9.2% from 9.5% last year
• Modules & Polymer Margin stood at 6.4% from 8.7% last year
• Emerging Business Margins stood at 8.4% from 12.2% last year.

Shares of Samvardhana Motherson ended 3.2% higher at ₹93.2 after the results announcement. Before today’s trade, the stock was down 38% from its 52-week high.