Samvardhana Motherson Q2 Results Review - Inorganic Levers To Cushion Base Volumes: Yes Securities

Yes Securities Report

Samvardhana Motherson International Ltd.'s Q2 FY25 missed our/street Ebitda estimates by ~11%/14%, led by weak revenue print (~4% miss) due to moderating global light vehicle demand coincided with low production activity due to summer holidays.

Weak gross margins at 45.8% (estimate 46.4%-60bp QoQ) led consolidated margins at 8.8% (+40bp YoY/ -80bp QoQ, estimate 9.5%). Underlying revenue growth of ~18% YoY in Q2 FY25 was led by combination of organic and inorganic (~Rs 62 billion contribution in Q2 Rs 18.5 billion in YoY), significantly outpacing ~5% decline in global light vehicle volumes.

All the sub segments grew by low single to double digit led by combination of content increase and integration of acquisitions such as Yachiyo, Ichikoh, AD industries and Dr. Schneider etc. among key ones.

However, company did indicated challenges such as- soft production expected in Europe (LV and CV) and NA (CV) and delay in EV launches in Europe impacting production (negated by extended life of ICE platforms bode well for tech agnostic approach) to weigh on growth ahead.

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