Samvardhana Motherson Plans To Tap Growth Opportunities After Rs 6,438-Crore QIP

Samvardhana Motherson International Ltd., which raised funds via the qualified institutional placement route this week, aims to capitalise on the incremental growth opportunities, according to the company’s Chief Financial Officer Kunal Malani.

On Sept. 20, the company had informed the stock exchanges about raising Rs 6,438 crore through the QIP route. The company witnessed strong interest from domestic and foreign institutional investors for its QIP issue.

Elaborating on the company’s future growth plans after the QIP, Malani told NDTV Profit that the idea behind the fundraise was to "fortify the balance sheet" and the company is in a capacity to "actually go after all of the opportunities parallelly".

Malani added that initially the funds from the QIP will be used to settle existing debts and in the long run, it will enable the company to tap into growth opportunities.

“Going forward, we do anticipate many of these opportunities to kick in, and thereby we will lever it up again and add to our business perimeter that exists,” Malani said.

Talking about the targetted net debt-to-Ebitda ratio of the company, Malani added that it will try to keep it under 2.

"The fact is that we have never exceeded that. So, it highlights our discipline. We have been an acquisitive entity and during the last decade, we have done 30-plus acquisitions. We have never exceeded the number 1.5 itself. So 1.5 to 2 has been our comfort level," he added.

Reacting to the possible impact of BMW cutting its guidance for FY25, Malani claimed that the Samvardhana Motherson International will not face much of the heat. BMW comprised 5% of Samvardhana Motherson’s revenue as of fourth quarter of the financial year 2023–24.

“If you look at our revenue share, which is around odd 4% you can take a 10–15% haircut. So you can imagine the impact it is going to have on our top-line in that regard. That is the beauty of the 3CX system we have followed, no country, no component and no customer should be more than 10% of our sales,” Malani explained.

BMW cut its Ebit margin guidance for current year 2024 to between 6% and 7% from the 8% and 10% range earlier.