Samvardhana Motherson Q3 Results Review - High Depreciation, Interest Costs Dent PAT: Motilal Oswal

Motilal Oswal Report

Samvardhana Motherson International Ltd. in Q3 reported an in-line operating performance, but higher depreciation/interest costs decreased overall profit after tax.

The next two quarters would be transitory because of the ongoing consolidation of four other businesses during Q4 FY24 to Q1 FY25. We reduce our FY24E/FY25E earning per share by 17%/4% to factor in higher depreciation and interest costs due to the recent acquisitions.

The stock trades at reasonable valuations of 29.9 times/21.3 times FY24E/FY25E consolidated EPS. Maintain 'Buy' with a target price of Rs 130, based on March- 26E sum-of-the-parts (including Rs 8/share for the recent acquisitions).

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